Final Report

Study on Arbitration and Settlement of Disputes in Infrastructure Project- A Case Study
CHAPTER 1
INTRODUCTION
1.1 HISTORY OF ARBITRATION

The origin of arbitration is lost in hoary past of human civilization. There is
reference to arbitration in ancient India and also among Greeks, Romans and Chinese.
Hindu civilization expressly encouraged the settlement of difference by tribunals

chosen by the parties themselves- tribunals whose decision is to be accepted as final and
conclusive between the parties. Apart from the courts establishment by the king there were
other tribunals recognized in the ancient texts and digest of Hindu law. The smritis refer,
in particular to three types of popular courts (Puga, sreni nad kula) and speaks the
authority of these agencies to decide law suits.
There were then panchayats in mediaeval India. The panchayats were territorial
such as village panchayats and sectarian such as panchayats of different castes and creeds.
The panchayats were held in great veneration. The panchas were regarded as panch
parameshwar, before whom none dared to speak falsehood. The panchayat proceeded in
informal way untrammeled by technicalities of procedure and law of evidence. The simple
and informal system of arbitration through the panchayats, though useful, was ineffective
to deal with complexities arising out of advancement in social and economic spheres.
Traces of panchayats can still be found among schedule tribes and backward classes,
where they exercise considerable influence in many social and caste questions.
After the advent of British Rule in India, regulations were framed in the
presidencies of Bengal, Madras and Mumbai. Those regulations also provided for
arbitration, though their provisions were not uniform, nor were they drawn very
elaborately.
In 1834, Lord William Bentinck became the first governor general of India and the
legislative council of India came to be established. The council‟s first enactment to
regulate the procedure of civil courts was passed as act VIII of 1859. Section 312 to 327 of
that act dealt with arbitration in pending suit as well as arbitration without intervention of
the court. That act was repealed by Act X of 1877, which made no change in the law
relating to arbitration. The code of civil procedure was again revised in 1882, which
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repeated the same provision about references of arbitration with or without the invention
of the court. There was yet no provision for reference of future dispute to arbitration.
Then, Indian arbitration act 1899 of the model of English Arbitration Act 1899 was
passed, which was applicable to presidency towns and was later on extended to a few
more commercial towns. The second schedule of the code of civil procedure 1908
contained similar provision about arbitration, which applied to the rest of the country. A
need was felt that the provisions of arbitration should be transferred into a comprehensive
and separate act. This led to the enactment of Indian arbitration act 1940. This act repealed
the arbitration act 1899, and section 89, 104, clauses (a) to (f) and second schedule of code
of civil procedure 1908. This act of 1940 as its preamble showed consolidated and
amended the law relating to arbitration in British India.
The United Nations Commissions on International trade law adopted the

UNCITRAL Model law on international commercial arbitration in 1985 and UNCITRAL
conciliation rules in 1980. These model law and rules were recommended by the general
assembly of the United Nations to all the countries for adoption in their own laws.
So, the arbitration and conciliation act 1996 came to be passed on 16th
August 1996, taking into account UNCITRAL model law and rules and also vastly making
amendment in the law relating to domestic arbitration contained in 1940 act. The 1996 act
repealed the arbitration act 1940, the arbitration act 1937 and foreign awards act 1961.
1.2 OBJECTIVES OF THE STUDY

To study and understand why the shortcomings are cropping up in arbitration
procedure and how to overcome these handicaps
To study about Arbitration in Construction Companies.
To Study various ADR Mechanisms.
To Analyze case study of an Infrastructure project related to Arbitration
1.3 SCOPE OF THE STUDY

Scope of study is limited to Arbitration and conciliation act 1996
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1.4 METHODOLOGY
1.4.1 Formulating Project Topic
• The selected topic should have some current implications.
• There should be scope and amenities to carry out the intended research as for
example; availability of required data, feasibility of carrying out survey etc.,
• The selected topic should contribute to knowledge in the desired field.
• The selected topic should receive the necessary concurrence from the research
guide
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1.4.2 Extensive Literature Survey
Once the problem has been formulated to know more about the topic, the abstracting
and indexing journals and published or unpublished bibliographies had been referred.
Academic journals, conference proceedings, government reports and books had been
tapped depending on nature of the problem. The earlier studies which are similar to the
study in hand had been carefully studied.
1.4.3 Preparing Design
The following consideration had been taken while preparing the design
The means of obtaining the information

Explanation of the way in which selected means of obtaining information will be
organized and the reasoning lead to the selection
The time available for thesis
Collection of relevant evidences with minimal expenditure of effort, time and
money.
1.4.4 Collection of Data
There are two types of data collection
1) Primary data collection

2) Secondary data collection
Primary data can be collected either through experiment or survey. In case of Survey data
can be collected by any one or more of the following ways
1) By observation
2) Through personal interview
3) Through telephonic interview
4) By mailing of questionnaire
5) Through schedules
In the thesis the data collected is of secondary data which were readily available.
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1.4.5 Execution of Project
If the execution of the project proceeds on the correct lines then the data to be
collected would be adequate and dependable. Theoretical study has been done in primary
stages and finally a case study had been presented at the later stage. Detailed analysis had
been done on the case study and presented in a systematical manner at the end.
1.4.6 Analysis of Data
There are four steps for analyzing the data
1) Editing
2) Coding
3) Classification
4) Tabulation
Editing is the procedure that improves the quality of data for coding
Coding is a procedure through which the categories of data are transformed into symbols
that may be tabulated and counted
After coding the data can be classified easily
Tabulation is a part of technical procedure wherein the classified data are put in the form
of tables
1.4.7 Interpretation and Conclusion
Once the thesis had been completed with the theoretical and analysis of case study
interpretation of that data should be done because interpretation may often trigger off new
questions which may lead to further researches. At the end, conclusion had been written
based on the study done and possible recommendations had also been brought out.
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1.4.8 Preparation of Report
The report had been prepared in the following pattern
1) Preliminary pages
2) Main text
3) End matter
In preliminary pages the report will carry the title and date followed by acknowledgements
and declaration. Then there is table of contents and list of graph and charts if any
The main text of report should have the following parts
a) Introduction
b) Summary of findings
c) Main report
d) Conclusion
At the end of the report appendices will be enlisted in respect of all technical data.
Bibliography i.e. list of books, journals, reports etc. consulted, references will also be
given in the end.
1.5 STUDY SYNTHESIS
Chapter 1: Introduction
This chapter deals with the history of arbitration and how it got evolved, objectives
of the study, scope of the study and methodology to showcase how the work had been
carried out.
Chapter 2: Review of Literature
This chapter mainly emphasize on Indian law and causes for the change of Indian
arbitration act 1940. It also deals with the important features of 1996 act and what are the
major reasons for the change of English law. Comparison between Indian law and English
law had also been highlighted in this chapter
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Chapter 3: Arbitration
This chapter deals with definition of arbitration and arbitrator, need for arbitration,
growth and development of arbitration and why arbitration is preferred to litigation.
Appointment of arbitrator as per arbitration and conciliation act 1996 had also been
highlighted in this chapter
Chapter 4: Alternate Dispute Resolution Mechanism
This chapter emphasizes mainly on different types of alternate dispute resolution

mechanism and how it will be carried out.
Chapter 5: Domestic Arbitration
This chapter deals with introduction to domestic arbitration and the main
objectives of the bill. Advantages and disadvantages of domestic arbitration had also been
brought out in this particular chapter
Chapter 6: International Arbitration
This chapter mainly deals with the need for international arbitration and
international arbitrating agencies.
Chapter 7: Salient Features of the Arbitration and Conciliation (Amendment) Bill

2003
This chapter mainly emphasize on the major objectives of the bill and the interim
measures taken by the court to apply to international arbitration outside India. The main
emphasis is given on the changes that had been taken place with respect to the earlier act.
Chapter 8: Case Study

This chapter mainly deals with the arbitration proceedings that had been taken place
between Municipal Corporation of Delhi (respondent) and M/s Suresh Bros, Municipal
Contractor (claimant)
Chapter 9: Conclusions and Recommendations
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CHAPTER 2
REVIEW OF LITERATURE
The arbitration and conciliation act 1996 has revolutionalised the law of arbitration
in India. Prior to 1996, the Indian arbitration act 1940 which was the law governing most
arbitrations empowered courts to supervise arbitral process in many respects. The courts
could in appropriate cases decline to refer the matters to arbitration; determine arbitrator‟s
jurisdiction; revoke his appointment; set aside or modify his award; and examine the
award before allowing it to be enforced
The arbitration and conciliation act 1996 has changed the law substantially. The
UNCITRAL model law is the basis for the act. The UNCITRAL model law was a model
law prepared by the United Nations commission on international trade law designed to
promote international trade and commerce. The UNCITRAL model law perceives that
excessive regulation the law provides for maximum of party autonomy and minimum of
court intervention.
Most nations accept that excessive regulation of dispute resolution hinders

international trade; but they also accept the need for some form of regulation. There is no
unanimity about what constitutes excessive and what constitutes proper regulation. It is
her that the differences between the arbitration and conciliation act 1996 and the English
arbitration act 1996 provide interesting and instructive comparison.
2.1THE INDIAN LAW

Law prior to the arbitration and conciliation act 1996 prior to 1996, the Indian
arbitration act 1940 was the most important legislation governing the law of arbitration. In
addition there were other legislations that dealt with recognition and enforcement of
foreign awards. There was also legislation that prescribed statutory arbitration
The Indian arbitration act 1940 enabled the parties to choose their arbitrator and
stepped in to appoint him only either where the procedure agreed upon did not exist or
where it failed. After the appointment the arbitrator could choose his procedure and make
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his award within 4 months after entering on the reference. If extension of time were
required the court would have to allow it.
The court retained control over the arbitral process by having power to determine
the jurisdiction of the arbitrator. The court could remove an arbitrator or revokes his
appointment. After the award the court could remit modify or set aside the award
2.2CAUSES FOR CHANGE OF THE LAW
The Indian arbitration act 1940 has stood for 56 years before it was repealed. It
was taken up for consideration for review twice by the law commission once in 1978 and
the next in 1987. At both times, the reports found the legislation satisfactory. In practice it
was found that the awards were often challenged in courts and it took a long time in courts
to resolve the issues. Although most of the time the challenges to the award did not
succeed, the time that the courts took to decide the case defeated the object of arbitration
which was and is that it should be quick cheap and adaptable.
The problem thus was that the calendars of the courts were crowded and not that
there was any serious defect in the Indian arbitration act 1940
By 1991 India has changed its economic policy frame work so as to attract
international investment. The international businessmen concerned with international
business were wary of the delays in the Indian courts and wanted a dispute resolution
system that quickly resolved the disputes. As UNCITRAL model law was beginning to
acquire international acceptance India decided to adopt it not only for international
arbitration (for which it had been designed) but for domestic arbitration as well.
The result was that the entire case law carefully built for over half a century has
become irrelevant. Although the object of those who made the law was to bring the law of
arbitration in tune with the rest of the developed world, the sudden change in the system of
administration relating to that law has led to complications in interpretation from which
we are still not free.
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2.3 IMPORTANT FEATURES OF THE ARBITRATION AND

CONCILIATION ACT 1996
The arbitration and conciliation act 1996 is designed to support party autonomy
and minimization of court intervention. The act is divided into four parts: part 1 deal with
arbitrations to be held in India and leads to making of a domestic award. It is based on the
UNCITRAL model law- in fact it is in many ways a copy of it.
10 chapters divide it
Chapter 1 bears the title „general provision‟
Chapter 2 bears the title „arbitration agreement‟
Chapter 3 bears the title „composition of arbitral tribunal‟
Chapter 4 bears the title „jurisdiction of arbitral tribunal‟
Chapter 5 bears the title „conduct of arbitral proceedings‟
Chapter 6 bears the title „making of arbitral award and termination of proceedings‟
Chapter 7 bears the title „recourse against arbitral award‟
Chapter 8 bears the title „finality and enforcement of arbitral awards‟
Chapter 9 bears the title „appeals‟
Chapter 10 bears the title „miscellaneous‟
Part ii, part iii, part iv of the arbitration and conciliation act 1996 deal with recognition and
enforcement of foreign awards, conciliation and supplemental provisions
In addition to the above certain enactments such as the electricity (supply) act
1948, the telegraph act 1885 etc contain arbitration clauses.
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2.4 THE ENGLISH LAW
2.4.1 Law Prior To The English Arbitration Act 1996
Prior to the (English) Arbitration Act, 1996, arbitration law was contained in the
Arbitration Acts of 1950, 1975 and 1979. The Arbitration Act of 1975 limited the
discretion of the High Court to stay any action brought in breach of an arbitration
agreement, which was not a domestic arbitration agreement. It continued the discretion
in respect of domestic arbitration agreements. The 1975 Act also provided for recognition
and enforcement of foreign awards, something which India had already enacted way
back in 1961. The 1979 Act gave the High Court a new appellate jurisdiction limited to
determining a question of law arising in the course of the reference and to hearing an
appeal on a question of law arising out of an award provided that certain conditions were
fulfilled.
The 1950 Act contained many provisions similar to the Indian Arbitration Act, 1940.
An important difference between the two enactments is to be found in s. 24 (1) of the English
Act, which provided that a party could apply for revoking the appointment of an arbitrator,
although it had agreed in advance for his appointment knowing that such arbitrator, by virtue
of his relationship with the other party, would not be impartial. Such a provision did not
exist in India and as a result in a large number of cases, particularly involving government
or public sector undertakings, courts upheld appointments even when the arbitrator‟s lack
of independence or impartiality was not in doubt.
2.4.2 Causes for Change of the Law
After the formulation of the UNCITRAL Model Law in 1985, the British Government
established a Departmental Advisory Committee on Arbitration Law (DAC) first under the
chairmanship of Lord Justice Mustill and later of Lord Saville. These committees
recommended against adopting the UNCITRAL Model Law on International Commercial
Arbitration. However 'very close regard was paid to the model law in the formulation of the
draft Bill which finally led to the (English) Arbitration act 1996.
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2.4.3 What Follows Highlights Some Of The Major Reasons.
One reason was that the Model law was not a Convention. Hence, all State would
not follow the Model Law provisions in identical manner the way they were obliged to do
with regard to the New York Convention of 1958 Another reason given was that the model
law was not a complete code of arbitration. The Model Law was applicable for only the
international commercial arbitration regard to international commercial arbitration the
Model Law did not contain provisions governing the interpretation of arbitration
agreements, the powers, duties and liabilities of arbitrator; prescription by lapse of time
resjudicata; capacity; arbitrability; multiparty proceedings; discharge; nullity or
avoidance of the contract to arbitrate. Again the model law does not say anything about the
evidence generally, nor does it say whether evidence can be given orally or witnesses cross
examined. It says nothing about discovery of documents. It does not even say whether the
procedure to be followed is the accusatorial or the inquisitorial pattern. The third reason
given was that the model Law is expressed in language which differs from that of a typical U
K statute Next, the U K arbitral laws have had closer relationship between the arbitral
process and the courts than is the case in most civil law countries. Although the English courts
have insisted that those who have agreed for arbitration honour awards, it has also, as a
corollary exercised supervision on the arbitral process by keeping powers to set aside or
remit the award and also allowed question of law to be referred to the courts.
These and other reasons may make the wholesale acceptance of Model law
difficult to follow , but the DAC recognized that it ought to enact another law as otherwise
it might be perceived that there is repudiation by the U K of the model Law, and which
might be against the interests of the UK.
For these reasons, some features of the Model law were accepted, and some rejected
by the English Arbitration Act, 1996.
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2.4.4 Comparison between the Indian and the English Acts
In the space and time available, it is not possible to make an exhaustive examination
of all the provisions. The following highlights some of the major ones. Under the Arbitration
and Conciliation Act, 1996, the parties may choose the number of arbitrators they want,
provided that the number shall not be even under the (English) Arbitration Act,1996, the
parties may decide any number of arbitrators, whether the number is odd or even.
Under the Arbitration and Conciliation Act, 1996, the party that challenges the
arbitrator's lack of qualifications, impartiality, or independence has to wait till the award is
rendered when the arbitrator rejects the challenge. In fact, the court has no power to remove
the arbitrator under any circumstances, except, one, namely, where he fails to act without
undue delay. Under the (English) Arbitration Act, 1996, the party that wishes to challenge
the arbitrator's lack of qualifications, impartiality, or independence may approach the court to
remove the arbitrator.
Under the Arbitration and Conciliation Act, 1996, the court has no power to revoke
the authority of an arbitrator. Under the (English) Arbitration Act, 1996, however, the court
has the power to revoke his authority in certain circumstances.
Under the Arbitration and Conciliation Act, 1996, the arbitrator is empowered to
determine the scope of his own jurisdiction. It is only after the award that the aggrieved party
can apply challenging arbitrator's determination of his jurisdiction. The challenge provision
however contains ambiguity in that provision. That provision states that if the arbitral award
deals with a dispute beyond the scope of the submission to arbitration, it is challengeable. It
does not provide for an eventuality where the arbitrator holds that he has no jurisdiction,
although the court finds that he had such jurisdiction. In that case, there is no ground to set
aside the award under s. 34 and hence s. 34 (5) that provides for remanding the matter would
not apply. Nor would s. 33 (4), which enables the aggrieved party to approach the arbitrator to
decide a dispute that he 'omitted' to decide would apply, as the case would not be of omission but
of refusal.
The Arbitration and Conciliation Act, 1996 requires the arbitrator to be qualified,
impartial and independent and also to treat all parties equally. Under the (English)
Arbitration Act, 1996, the arbitrator is to act 'fairly and impartially‟; and to adopt
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procedures suitable to the circumstances of the case'. The (English) Arbitration Act, 1996
makes that provision mandatory and parties are not allowed to opt out of the same.
Under the Arbitration and Conciliation Act, 1996, no time limit is fixed for
rendering the award. It is not clear if the parties can compel the arbitrator by Agreement
that he should render his award within specified time. Under the (English) Arbitration Act,
1996, the parties may fix time limit for the arbitrator to render the award and the court has
the power to extend the time limit.
The Arbitration and Conciliation Act, 1996, provides for payment of interest and
also provides default rate of 18%, unless the award provides otherwise. The (English)
Arbitration Act, 1996 provides for interest but leaves the rate to the discretion of the
arbitrator. Under the Arbitration and Conciliation Act, 1996, there is an overriding bar on
court intervention, except to the extent provided for in the Act. Under the (English)
Arbitration Act, 1996, there is no such overriding bar.
In the Arbitration and Conciliation Act, 1996, the court has no power to revoke or
remove the arbitrator. Under the (English) Arbitration Act, 1996, the court has such
powers.
The Arbitration and Conciliation Act, 1996 does not provide for any reference to
the court for a question of law to be determined as a preliminary point. The English
arbitration act 1996 however does, if all parties agree or if the Arbitral Tribunal permits to
do so.
The court has power to set aside or under certain circumstances to remit the award
under the Arbitration and Conciliation Act 1996.The court however has no power to
modify the award. Under the (English) Arbitration act 1996/ the court has power to set
aside and vary the award. It has also the power to remit the award. The grounds for
challenging the award under the Arbitration and Conciliation, do not include 'serious
irregularity' under the (English) Arbitration Act, 1996, they do.
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CHAPTER 3
ARBITRATION
3.1 INTRODUCTION:
A story goes that long ago there was an elderly gentleman who used to parade
outside the law courts in Strand wearing a battered top hat and a billboard bearing the
words "Don‟t litigate - Arbitrate". He was regarded as a nutcase and avoided by
members of the bar His story was simple. He had been the beneficiary of a disputed
will. He had been offered the chance of arbitration about it, but advised by his
solicitor, he had declined. Before any decision had been arrived at in the courts, all
litigations ground to a halt. The entire estate had been expended on lawyer's fees;
neither he nor his opponents got anything. The lawyers carved it up between them. So
people thought there must be a better way of settling disputes than this. And the answer
was - ARBITRATION."
What is arbitration'' and "Who is an arbitrator" are question which although of

immense importance, are not capable of simple answer. To add to that difficulty. The
word is currently misused to apply to two procedures which are not arbitrations in that
they lack at least one essential element of true arbitration. The first is the use of the
word in relation to labour disputes. It is commonly used by politicians and the press to
describe the reference to a third party by employers and trade unions of a labour
dispute. That, procedure is not true arbitration. Since neither party intends the so-called
award by, he so-called arbitrator should in any wav be binding on them.
The word Arbitration means the reference of the matter in dispute to the
judgment of a person(s) selected by the parties. It refers to proceedings held pursuant
to a submission it is a method of setting a dispute in a quasi-judicial manner it is a
method of determining, but not qualifying the rights of the parties.
Arbitration is the most common & accepted mode of resolving the disputes
arising out of the civil engineering contracts. Arbitration means a arrangement for
investigation & determination of a matter/matters of difference between contending
parties by one or more unofficial persons chosen by the parties. The dispute is not
submitted for decision to the ordinary public courts out to a domestic tribunal.
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An 'Arbitrator' is a private extraordinary judge between parties, chosen by their

mutual consent/as per the arrangement settled by them/through the court of law to
settle the disputes between them. The 'Arbitrators' are so called because they have
arbitratory powers & as long as they observe the submission and keep within the
boundary of law, their awards are definite for which no appeal will lie except on the
grounds given in section 30 of the Arbitration Act 1940.
3.2 NEED FOR ARBITRATION:
The contracts of civil engineering works are different from the contracts of
supply of engineering goods & commodities in that the pricing of the civil
engineering projects is done before the project comes into existence .The details,
terms, specifications, drawings, BOQS and quality of the project such as a bridge, dam
etc are meticulously detailed in the contract documents which Endeavour to depict the
real picture of the said project. Hence, it is Utopian to believe that there will not be any
genuine difference of opinion between the owner and the contractor as regards
interpretation of said details, terms, specifications, BOQ'S etc. Further, there may be
changes and/or variation necessitated by the changed ground conditions and changes and
modifications of the project by the owner .during the execution of the project. Hence it
will not be possible in the contracts of the complex and intricate projects to produce a
cut and dried final account without an argument.
A dispute or difference shall be deemed to arise when a claim/assertion made by

one party is rejected by other party and that rejected is not accepted the dictionary meaning
of the word "claim" is “an assertion of a right to something ", "claim" means a demand for
recognition of one's right which can be accepted/rejected.
In order to avoid any disruptive effect on progress & quality of work, it is

imperative that disputes are resolved expeditiously. Arbitration has been found to be the
best method for resolving disputes arising out of construction contracts being inexpensive
and expeditions.
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3.3 GROWTH AND DEVELOPMENT OF ARBITRATION
Resolution of disputes through pancha which is nothing but arbitration is a very old
tradition in India. It is believed that god speaks through pancha and it is with this
background that people in our country used to honour the verdict of pancha on the disputes
referred to them.
In order to regulate the system of arbitration and to give power to arbitrators under
law, the arbitration act was enacted in India in 1940
But due to needs of the time, certain changes had to be incorporated in the 1940
act. Now the arbitration and conciliation act 1996 is a statute for settlement of commercial
disputes in India by arbitration. It repeals the arbitration act-1940
3.4 WHY ARBITRATION IS PREFERRED TO LITIGATION
The commercial community the construction industry and landlords have long
preferred arbitration to litigation. Their reasons for their preference are summarised below
1) Expertise: an arbitrator is normally selected for his expert knowledge of a

particular trade whereas, apart from the official referees high court judges deal
with such a wide range of cases that they possess little expertise except by accident
2) Privacy: cases in the court are conducted in public and inquisitive journalists /
trade competitors cannot be excluded except in the most exceptional
circumstances. At an arbitration hearing nobody except the parties is entitled to be
present and nobody else can be without the consent of both the parties and the
arbitrator
3) Convenience: an arbitrator normally arranges for a hearing, if one is necessary at a

time and place to suit the convenience of the parties. In litigation the case is listed
to suit the convenience of the court
4) Expedition: whether the dispute is resolved without delay by arbitration depends

entirely upon the quality of the arbitrator some arbitrators may prove dilatory and
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allow one of the parties to be dilatory. But if the arbitrator is competent he can
bring matters to a hearing quickly. The arbitrator has ample powers to speed up the
process and the fact that these powers are infrequently used tends to reflect on the
arbitrator and not on the arbitration process
5) Cost: there is a saving of expense but not always. It should not be forgotten that the
parties to the arbitration have to pay for the room in which the hearing takes place
and the fee of the arbitrator whereas apart from the court fee the parties do not pay
for the court /services of the judge
6) Advocacy: the right to appear for parties in the high court is limited to
barristers/lawyers. At arbitration anyone can appear for the parties.
3.5. APPOINTMENT OF ARBITRATOR / ARBITRATORS -

ARBITRATION AND CONCILIATION ACT, 1996
 SECTION-10: NUMBER OF ARBITRATORS
As per section 10(1) of the Act, though the parties are free to determine the number of
arbitrators, such number shall not be an even number. Sub-section 2 of Section 10 further
provides that failing determination about the number of arbitrators by the parties, the
arbitral tribunal shall consist of a sole arbitrator. This is, however, in contrast to article
10(2) of the UNCITRAL Model Law, which provides that failing determination by the
parties, the number of Arbitrators shall be three.
 SECTION 11-APPOINTMENT OF ARBITRATORS-ARBITRATION

AND CONCILIATION ACT, 1996
As provided in Sub-Section (1) of Section 11, a person of any nationality may be an

arbitrator unless otherwise agreed by the parties. Sub-section 2 provides for party autonomy in
agreeing on the procedure for appointing arbitrator or arbitrators is, however, subject to the
provisions made in sub-section 6 of Section 11. As provided in sub-section 3 of section 11,
failing any agreement on the procedure for appointing arbitrators, in arbitration with 3
arbitrators, each party shall appoint one arbitrator and two appointed arbitrators shall
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appoint third arbitrator, who shall act as presiding arbitrator. Provisions of Sub-section 4 to
12 of Section 11 deal with the situation where the arbitrator or arbitrators are required to be
appointed by the chief justice of High Court or his designate in case of domestic arbitration
and by the Chief Justice of India or his designate in case of International Commercial
Arbitration.
 THE APPOINTMENT OF ARBITRATOR FALLS BROADLY UNDER

THE FOLLOWING THREE HEADS
i. An arbitrator or arbitrators nominated by the parties in the arbitration agreement.
ii. Arbitrator or arbitrators appointed by the parties.
iii. Arbitrator or arbitrators appointed by a third party designated by name or holder

for the time being appointment. Courts also appoint the arbitrators in any of the
following cases generally provided in the Arbitration Law:
a. A person of any nationality may be an arbitrator, unless otherwise agreed by the

parties.
b. Subject to the provisions in the Arbitration Law the parties are free to agree on a
procedure for appointing the arbitrator or arbitrators.
c. Failing any agreement referred in the Arbitrator Law, in arbitration with three
arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall
appoint the third arbitrator who shall act as the presiding arbitrator.
d. If the above appointment procedure applies and
- A party fails to appoint an arbitrator within thirty days and/or the period specified
in the Arbitration Law/Arbitration Clause from the receipt of a request to do so
from the other party; or
- The two appointed arbitrators fail to agree on the third arbitrator within thirty days
from the date of their appointment. The appointment shall be made, upon request
of a party, by the designated court or institution designated by the court.
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 APPOINTMENT OF ARBITRATOR BY DESIGNATED AUTHORITY
Where the arbitration clause contained in the contract agreement entered between
the parties provides for appointment of arbitrator by person designated either by name
c as the holder of an office would b regarded as an agreed procedure between the
parties for appointing a-arbitrator or arbitrators. If the person: designate fails to appoint
at arbitrator, then the suffering part may request the concerned Chie Justice or his
designate to take necessary measures in clause (c) o sub-section 6 of section 11 of the
1996 Act. There can be different situation under these provisions which have been
dealt with by Courts and decided as under:-
(i) "If the appointment of an arbitrator itself is void an initio, nonexistent in the eyes
of law, the entire proceedings by such an arbitrator will not have any legal force" -
[1995 (Suppl.) Arb. LR 677(HP)].
(ii) "If the agreement provides for appointment of arbitrator by a named person. No
application can be made to Court if the named person does not neglect or refuse to
appoint arbitrator" - [1992(2) Arb.LR93 (SC)].
(iii) "When the parties have named an arbitrator or have provided for the procedure for
appointing an arbitrator, and the Court finds that an arbitrator has to be appointed. The
Court must initially call upon the concerned contracting party or the authority agreed
upon to appoint an arbitrator or to direct the named arbitrator to proceed in terms of
the agreement" – [2003(1) Arb.LR450 (Ori.)].
(iv) "Where the named arbitrator refuses to act, the arbitration agreement is deemed to
have exhausted itself and the only remedy is to approach the Court for appointment of
another arbitrator. The same result follows if the arbitration clause empowers the sole
arbitrator either to arbitrate himself or to nominate anyone else" -[1994(1) Arb.LR5
(SC)].
(v) "Court has power to appoint an independent person as arbitrator in certain

appropriate cases instead of the person named in the contract where parties for a valid
reason do not agree to appoint the person named in the contract as arbitrator"- [1993(1)
Arb.LR369 (Pat.)].
20
(vi) "Court is empowered to appoint a sole arbitrator when a vacancy has occurred and
the agreement does not provide for filling the vacancy by the parties and there is a
reasonable apprehension of bias in the mind of a party about the named arbitrator
appointed" -(1990(1 )Arb.LR287(A)].
(vii) "Where the named arbitrator in agreement is the Court itself, the appointment of
arbitrator by Court before considering whether it itself is prepared to arbitrate in the
matter between the parties or not, is not sustainable" -[1995(1 )Arb.LR308(AP)].
(viii) "Appointment of an arbitrator can be made by appointing an office by

designation and it is not necessary that the appointment has to be made of an
individual person only"-Hindustan Prefab Ltd. V/s Delhi Development
Authority" -2009(2) LR55 (Delhi) (DB) -Decided on 12.02 2009.
(ix) "If the contract has provided for a specified and named arbitrator or institution
known for its expertise or the contract have provided for certain essential qualification
to be possessed by the arbitrator to enable accuracy and efficacy in the matter of
appreciation of issues that fall for consideration, regard must be had to such terms and
the Chief Justice or his designate should seek to adhere to the same as nearly as
possible"
T.Srinivasa Rao, Railway Contractor v/s Union of India represented by General

Manager South Central Railway and ors. -2009(2) Arb. LR 581 (AP) - Decided on
4.2.2009
(x) Sub-section 3 of section 11 applies, when the parties have agreed that the number
of arbitrators to be appointed shall be 3, but cannot agree on a procedure for their
appointment. In such event, Chief Justice of the High Court can appoint the third
arbitrator-1996(2).Arb.LR705 (SC).
(xi) Further law recognizes appointment of a sole arbitrator even when as per contract
parties are entitled to appoint different arbitrators on their behalf." -1995(2) Arb.
LR406 (Bombay).
(xii)"An agreement providing for appointment of an employee of one of the parties

as sole arbitrator is valid and binding. -[1992(2)Arb.LR 203(Raj)]
21
(xiii) Appointment of an arbitrator can be made by appointing an office by

designation and it is not necessary that the appointment has to be made of an
individual person only" -Hindustan Pre-Feb Ltd v/s Delhi Development Authority -
2009(2) Arb. LR 55(Delhi)-Decided on 12.2.2009.
(xiv) In case the post of designated officer falls vacant at the relevant time of
appointment of an arbitrator as per agreement then the Chief Justice or his designate
would have jurisdiction to appoint arbitrator on request of a party.
22
CHAPTER 4
ALTERNATIVE DISPUTE RESOLUTION
The 1996 Act is a new and bold initiative for resolving disputes without resort to
litigation in courts by promoting ADR systems. The international trend is towards
adoption of ADR and the arbitration is perceived as a less preferred procedure with its
contentious and adversarial proceedings being less conductive to promotion of goodwill
between the parties. In ADR methods, the parties can arrive at a settlement which is result
of consensus rather than imposition since it is the parties themselves which take a decision
to either accept or reject the final settlement.
The Conciliator or mediator is thus neither an arbitrator nor a judge but only a
facilitator. Both in litigation as well as arbitration (which also mostly culminates into
litigation), the parties in their obsession or desire to win tend to become adversaries and
with the involved and long processes aided by all their advocates and decision not forecast
able, more often than not severe their relationships permanently, On the other hand in
ADR the relations are more harmonious since evolution of any solution is not necessarily
bound by the contract and the acceptance is original. Someone has aptly compared these
two and processes as proceedings before a divorce judge and consultations with a lion‟s
marriage counsellor. There is a spectrum of ADR processes coming up internationally in
relation to construction industry ranging from informal discussion to formal adjudication.
Some of these are described hereunder
4.1 TYPES OF ADR
• Conciliation
• Mediation
• Dispute Review Board
• Adjudicator
• Technical Advisory Committee (TAC) or Panel of Experts (POE)
• Referee
• Dispute Advisor and Facilitator
23
4.1.1 Conciliation
It is a process for resolving disputes with the aid of a natural mutually acceptable
conciliator who assists parties, privately and collectively, to identify the issues in a dispute
and to develop proposals for satisfactory settlement of disputes. Unlike arbitrator, a
conciliator is not empowered to decide any dispute it is a voluntary non-binding process
where the parties present their cases and after series of joint and separate discussions and
clarifications the conciliator develops options for settlement one after the other for
ascertaining response from each party until the case either settles or it becomes apparent
that a settlement will not be reached and the conciliation then can be ended, it is perceived
as a fairer process of interest-based direct negotiations instead of positional bargaining.
The 1996 Act officially recognizes this process, which can begin as soon as the
other party accepts invitation of one party initiating conciliation. There may be a sole (or
two or three conciliators acting jointly as agreed by parties) conciliator mutually
acceptable. Assistance of institutions may be taken for this purpose. Each party has to
submit a brief written statement to the conciliator about the dispute and additional
information as requested. The conciliator shall assist the parties in an independent and
impartial manner in their attempt to reach an amicable settlement of their dispute, having
regard to principles of objectively, rights and obligations of parties, the usages of the trade
and the circumstances and previous business practices (section 67). Conciliator can
communicate orally or in writing and meet with the parties together or separately with
each.
He is not bound by CPC 1909 of Indian Evidence Act 1872 (sections 66 and 67).
The conciliator shall not disclose any specific information to the other party if the party
giving it requires it to be kept confidential. Each party may submit suggestions for
settlement and reformulate who can also submit suggestions for settlement to the
conciliator who can also formulate terms of a possible settlement and reformulate it after
receiving observations of the parties. If the parties reach a settlement, a written settlement
agreement may be drawn up, signed by the parties and authenticated by the conciliator.
Such settlement agreement shall have the same status and effect as if it is an arbitral award
under the Act (section 74). All matters relating to conciliation proceedings shall be
terminated by signing a settlement
24
Agreement by the parties or by a written declaration by conciliator that further

efforts at conciliator that further efforts at conciliation are no longer justified written
declaration by one or both parties that the proceedings are terminate (section 76). The
costs are to be shared equally among the parties (section 78). The conciliator shall not act
as arbitrator or representatives of a party in any arbitral or judicial proceeding in respect of
the same dispute nor the parties shall present him there as witness. The views, admissions
and proposals made in course of conciliation proceedings shall also not be relied upon
(introduced as evidence in such arbitral or judicial proceedings. (Section 81)
It is felt that there should be some time limit on presentations by the parties to save
time. Similarly only senior representatives of parties like partner Executive Director, Chief
Engineer should represent at the proceedings to conduct fruitful negotiations.
Confidentially is essential and the proceedings should be too formalized. The objectives
should to find an acceptable compromise rather than forming individual opinion or a
„correct‟ answer.
4.1.2 Mediation
Mediation process is almost identical to conciliation except that the neutral party
i.e., the mediator, offers assessment of merit, in the stands of the parties When mediation
fails to bring a settlement agreement, the mediator records a not, containing his assessment
of the merits of each dispute and his opinion about the solution and forwards it to the
parties. Such a note can then enable the parties to review their respective rigid stand
decide whether to proceed with the arbitration/litigation and the mediator‟s assessment can
be quoted though no binding. Like an arbitration agreement the parties can also enter into
a mediation agreement.
The American Arbitration Association reports that over 85 percent of all

mediations/conciliation‟s result in a settlement. This is because the negotiation take place
specifically and with the assistance of a neutral expert (attorneys are often more interested
posturing than resolving disputes), each party gets an opportunity to educate and influence
their opponents in the opening presentations and to “test market” a settlement proposal
privately conveyed to the neutral party, the process enables each party a “realistic‟‟ look at
their case and developing options for settlement. The process is economical, quick, with
25
mutually satisfactory outcomes and high rate of compliance and preserves the ongoing
relationships.
4.1.3 Disputes Review Board (DRB)
The DRB is a panel of three experienced and impartial reviewer‟s one appointed
by each party with approval by the other and a third nominated by these two members
with the concurrence of parties to function as chairman. The members are chosen for their
expertise and pragmatic qualities and not for the legal qualifications. The DRB members
are provided with a copy of contract agreement and drawings and are kept abreast of job
progress problems and development. The DRB meets with the owner and contractor
representatives during regular (say. quarterly) site visits and encourages resolution of
dispute at job level.
When any dispute on the job cannot be resolved, any part not satisfies with decision of the
Engineer, can refer the dispute to the DRB. The Board obtains the position papers from
parties to explain their position, present evidence and answer “questions. In arriving at a
recommendation, the DRB considers the relevant contract provisions, correspondence,
other documents and particular circumstances of the dispute. The board‟s output to be
given within 8 weeks consists of a written, non-binding recommendation for resolution of
the dispute explaining the board‟s evaluation of the facts, contract provisions and the
reasoning which led to its conclusions. Acceptance by the parties is facilitate by their
confidence in the DRB member‟s technical expertise practical judgment as well as by the
parties
Opportunity to be heard. Decisions of DRB are usually accepted also because there
is little chance of doing better in arbitration. It is open to either party not to accept the
DRB‟s recommendation and to invoke arbitration within a specified time limit after
receiving DRB‟s recommendation. This process has been very well received
internationally. According to a report by DRB foundation, USA, the DRBs are functioning
on 98 ongoing projects in addition to 68, completed projects and are planned for another
162 projects. Standard procedures are evolved and a Construction DRB Manual has been
published. The Board members are paid a retainer ship fee during the contract period in
26
addition to sitting fees for the meetings and other expenses. The DRB is sometimes called
DAB (Dispute Adjudication Board)
The DRB report is usually unanimous; if not, the minority view is also included.
Members should not express any opinion on disputed matters during periodical visits and
seeking technical advice from members or their nomination as arbitrator for the job is
prohibited. Either party can request the DRB to consider its decision. In India also, the
provision of going though the ADR process of DRB (earlier non-binding intermediate
step) before invoking arbitration for disputes is being made in increasing number of major
projects, particularly those financed by multilateral agencies and quite a few DRBs are
functioning for the past several years.
4.1.4 Adjudicator
This is similar to DRB and is adopted for small size contracts (say. Below Rs. 20
crore). Instead of three members, There is a single adjudicator (experienced, practical and
impartial expert) usually nominated by the employer in the bid documents. It is open to
bidders to raise valid objections to the proposed name, while submitting bids. The
principles and procedures are identical to DRB process.
In India a number of projects including some highway projects provide for an adjudication
process before invoking arbitration.
4.1.5 Technical Advisory Committee/ Panel of Experts
Though the TAC or POE is similar to DRB/DAB, scope of the issues or disputes
referred for its advice is limited to technical problems only. A three member expert team is
appointed to keep abreast of developments and problems on the job through site visits and
discussions. In case of any differences or alternative solutions to a technical problem, the
advice of TAC/POE is given after hearing both parties and studying the problems. It is a
non-binding advice. The author is aware of a case in Mumbai where a dispute got resolved
through reference to TAC during construction and the arbitration was avoided.
27
4.1.6 Referee
For contracts having no arbitration clause when certain disputes arise the parties
sometimes enter into an agreement to refer the matter for decision to a mutually agreeable
neutral person instead of going in for arbitration or litigation. Referee could be a sole
referee or a panel of three referees like arbitration. The parties agree to abide by the
decision of referee who conducts proceedings more or less like arbitration but without
strict legal formalities and after hearing the parties, considering the evidence and
documents presented, gives his decision in form of an award. The process is less formal
and quicker than arbitration and has been successfully used in India in some cases.
4.1.7 Dispute Advisor and Facilitator
The parties select someone with no connection to either party and appoint him as
Dispute Advisor at the outset of a contract. His task is like an intervener and he advises on
the means of setting disputes. He may in some circumstances, assist in their resolution. He
may advise engaging an expert. He considers the cases of both parties and brings out pros
and cons, strengths and weaknesses and suggests solutions. Some time neutral professional
„facilitators‟ are engaged for assisting the parties to gain clarity and direction, establishing
methods for decision making and documenting the outcome of the facilitated process.
28
CHAPTER 5
DOMESTIC ARBITRATION
The term “Domestic Arbitration” denotes arbitration which takes place in India,
when the subject matter of the contract, the merits of the dispute and the procedure for
arbitration are all governed by Indian law or when the cause of action for the dispute has
arisen wholly in India or where the parties are otherwise subject to Indian jurisdiction.
5.1 INTRODUCTION
India took an active part in the formulation of the Model Law and also the
Conciliation rules. The advantage of these rules is that they are the product of consensus
amongst countries which follow both common law and civil law systems. Though the
UNCITRAL Rules were conceived in the context of international commercial disputes,
there is no reason why they cannot form the basis for domestic arbitration and conciliation.
A Working Group Meeting of Law Ministers, representatives of

FICCI, ASSOCHAM, CII, ICA, Indian Society of Arbitrators and eminent lawyers
Specializing in the field of Arbitration was held in Mumbai, in which there was a
general agreement that the Indian Law relating to Arbitration be consolidated in a
single enactment and that should be based on the UNCITRAL Model Law on
International Commercial Arbitration and UNCITRAL Conciliation Rules.
"The Arbitration and Conciliation Bill, 1995" was introduced in the Indian
Parliament on 8th May 1995. The Arbitration and Conciliation Ordinance 1996, No.8 Of
1996 was promulgated by the President on 16th January 1996. In exercise of the Power
conferred by Subsection (3) of Section 1 of the ordinance, the Central Government by
Gazette Notification issued on 24th January 1996, appointed the 25th January, 1996 as the
date on which the Ordinance came into force. This Ordinance was promulgated a second
time on 26th March 1996 and for a third time on 21st June 1996. The Ordinance was
replaced by this Act which received the assent of the President and given effect from 22nd
August, 1996, vide Notification published in the Gazette of India, Extraordinary, Part II,
and Sec 3(i) dated 22nd August 1996.
29
5.2 THE MAIN OBJECTIVES OF THE BILL ARE AS UNDER:
• To comprehensively cover international and commercial arbitration and conciliation

as also domestic arbitration and conciliation.
• To make provision for an arbitral procedure which is fair, efficient and capable of
meeting the needs of the specific arbitration
• To provide that the arbitral tribunal gives reasons for its arbitral award
• To ensure that the arbitral tribunal remains within the limits of its jurisdiction
• To minimize the supervisory role of courts in the arbitral process
• To permit an arbitral tribunal to use mediation, conciliation or other procedures
during the arbitral proceedings to encourage settlement of disputes
• To provide that every final arbitral award is enforced in the same manner as if it was a
decree to court.
• To provide that a settlement agreement reached by the parties as a result of
conciliation proceedings will have the same status and effect as an arbitral award on
agreed terms on the substance of the dispute rendered by an arbitral tribunal
• To provide that for purpose of enforcement of foreign awards, every arbitral
award made in country to which one of the two International Conventions
relating to foreign arbitral awards to which India is a party applies will be treated
as a foreign award.
Major thrust and legislative intent of the new Arbitration and Conciliation Act,
1996 is to reduce excessive judicial intervention due to which the earlier Arbitration
Act, 1940 suffered serious infirmities. Section 8(1) of the New Act, therefore, makes it
mandatory duty for the judicial authority i.e. court to stay legal proceedings if started,
where the subject matter has been referred to an arbitral tribunal. Similar provisions
are made in connection with the New York and Geneva Conventions under Section 44
and 54 of the Act respectively.
30
5.3 ADVANTAGES
Parties often seek to resolve their disputes through arbitration because of a number of
perceived potential advantages over judicial proceedings:
When the subject matter of the dispute is highly technical, arbitrators with an
appropriate degree of expertise can be appointed
Arbitration is often faster than litigation in court
Arbitration can be cheaper and more flexible for businesses
Arbitral proceedings and an arbitral award are generally non-public, and can be
made confidential
Because of the provisions of the New York convention 1958, arbitration awards
are generally easier to enforce in other nations than court judgments
In most legal systems, there are very limited avenues for appeal of an arbitral
award
5.4 DISADVANTAGES
However, some of the disadvantages of arbitration can be that:
Arbitration agreements are sometimes contained in ancillary agreements, or in

small print in other agreements, and consumers and employees sometimes do not
know in advance that they have agreed to mandatory binding pre-dispute
arbitration by purchasing a product or taking a job
If the arbitration is mandatory and binding, the parties waive their rights to access
the courts and have a judge or jury decide the case
In some arbitration agreements, the parties are required to pay for the arbitrators,
which adds an additional layer of legal cost that can be prohibitive, especially in
small consumer disputes
In some arbitration agreements and systems, the recovery of attorneys' fees is
unavailable, making it difficult or impossible for consumers or employees to get
legal representation; however most arbitration codes and agreements provide for
the same relief that could be granted in court
31
If the arbitrator or the arbitration forum depends on the corporation for repeat
business, there may be an inherent incentive to rule against the consumer or
employee
There are very limited avenues for appeal, which means that an erroneous decision
cannot be easily overturned
Although usually thought to be speedier, when there are multiple arbitrators on the
panel, juggling their schedules for hearing dates in long cases can lead to delays
In some legal systems, arbitral awards have fewer enforcement remedies than
judgments; although in the United States, arbitration awards are enforced in the
same manner as court judgments and have the same effect
Arbitrators are generally unable to enforce interlocutory measures against a party,
making it easier for a party to take steps to avoid enforcement of an award, such as
the relocation of assets offshore
Rule of applicable law is not necessarily binding on the arbitrators, although they
cannot disregard the law.
Discovery may be more limited in arbitration
The potential to generate billings by attorneys may be less than pursuing the
dispute through trial.
32
CHAPTER 6
INTERNATIONAL ARBITRATION
International Arbitration” has a foreign ingredient. Arbitration becomes

“International” when at least one of the parties involved is resident or domiciled, outside
India or the subject matter of the dispute is abroad. The law applicable to an arbitration
proceeding may be the Indian law or a foreign law, depending on the terms of the
contract in this regard and the rules of conflict of laws.
6.1 NEED FOR INTERNATIONAL ARBITRATION
The growth of international trade is bound to give rise to international

disputes, which transcend national frontiers and geographical boundaries. For the
resolution of such disputes the preference to international arbitration vis-a-vis litigation
in national courts is natural because of arbitration being preferred to litigation i n courts
and the foreign element being preferred in the international arbitration to the
domestic element in the national courts. This is also because there is no international
court to deal with international commercial disputes.
In situations of this kind, recourse to international arbitration in a convenient

and neutral forum is generally seen as more acceptable than recourse to the courts as
a way of solving any dispute, which cannot be settled by negotiation
The rationale and purpose of international arbitration should be to provide

a convenient, neutral, fair, expeditious and efficacious- forum for resolving disputes
relating to international commerce.
Basic features, which are uniform in the legal framework for resolution of
international commercial disputes, can be broken down into three stages:
(i) Jurisdiction;
(ii) Choice of law; and
(iii) The recognition and enforcement of judgments and awards.
33
The trend towards growing judicial intervention that tends to interfere with arbitral
autonomy, as also finality is a significant factor to be kept in view. The need is to
reconcile and harmonize arbitral autonomy and finality with judicial review of the arbitral
process. National laws differ on this issue. United Nations Commission on International
Trade Law (UNCITRAL) Model Law attempts to promote harmony and uniformity in this
sphere. The aim is to ensure arbitral autonomy coupled with neutrality or impartiality in
the arbitral process by the composition of the arbitral by competent and impartial members
that ensures equality between the parties and full opportunity to them to present their case.
Total exclusion of judicial intervention does not match with the current trend but the scope
of judicial supervision needs to be reduced to the minimum.
The source of authority of the international arbitral tribunal is the agreement of the
parties and not the mandate of the State. The choice of the law applicable is also
determined by the provision in the arbitration agreement. With the increased arbitral
autonomy the requirement of reasons for the award is greater. Apart from
transparency in the arbitral process, it also acts as an inherent check on the arbitrators and
discloses to the party the basis of the award and the logical process by which the
conclusion was reached by the arbitrators. The presence of reasons also regulates the
scope of judicial supervision.
Informality of the arbitral process permits relaxation from strict rules of evidence and
it reduces costs and delay that are often unavoidable in litigation. However observance of
basic principles of natural justice cannot be dispensed with.
Appropriate provisions for enforcement of award are essential to impart efficacy

international arbitration.
These are some of the significant and basic features of international arbitration the
UNCITRAL Model Law aims at achieving these objectives by incorporation principles of
universal application in the field of international commercial arbiter; for resolution of such
disputes.
34
The UN Commission on International Trade Law has adopted the UNCIT Model Law
on International Commercial Arbitration in 1985. The General Assembly of the UN has
recommended that all countries give due consideration to the Model Law, m view of the
desirability of uniformity of the law of arbitral producers the specific needs of
international commercial arbitration practice.
6.2 INTERNATIONAL ARBITRATING AGENCIES
As the need for international commercial arbitration arose, many agencies dealing
with such issues came up. Some of the prominent ones are listed below:
 International Chamber Of Commerce (ICC)
 London Court of International Arbitration (LCIA)
 Singapore International Arbitration Centre (SIAC)
 American Arbitration Association (AAA)
35
CHAPTER 7
SALIENT FEATURES OF THE ARBITRATION AND

CONCILIATION (AMENDMENT) BILL 2003
7.1 THE MAJOR OBJECTIVES OF THE BILL ARE

 To resolve the conflict between some judgments of the High Court under the Act
 To bring it in conformity with the UNCITRAL Model Law in certain respects
 To speed up the pending was well as future arbitrations by providing for a time limit
within which proceedings will have to be concluded which will be an improvement
upon the UNCITRAL model
 To rectify certain mistakes which have crept into some provisions of the Act
 To provide for the establishment of a new Arbitration Division within each High
Court where awards can be challenged under section 34,34A or 36
 To provide for Fast Track Arbitration following a special procedure
7.2 SECTION 9 (INTERIM MEASURES BY COURT) TO APPLY TO

INTERNATIONAL ARBITRATION OUTSIDE INDIA
The UNCITRAL Model Law permits Art 9, which refers to interim measures by
Court, to apply to „international arbitration‟ outside the country.
The 1996 Act did not contain such a provision. This led to conflicting judgments.
This omission is rectified, being a deviation from the UNCITRAL Model Law.
Section 8, 27, 35 & 36 of the Act are also proposed to be applied to international
arbitration outside India, as done under the Model Law.
36
7.3. COURT TO DECIDE JURISDICTIONAL ISSUES, IF ANY,

BEFORE MAKING THE REFERENCE, WHENEVER IN AN
ACTION BEFORE IT, THE RESPONDENT RELIES UPON AN
ARBITRATION AGREEMENT
Section 8: Where a defendant/respondent relies on an arbitration clause before a

judicial authority before making reference, jurisdictional issues „may‟ be decided: sec. 8(4)
& (5):
It is proposed to bring sec. 8 into conformity with the UNCITRAL Model law
which enables the court to decide jurisdictional issues, if any, before making the reference,
whenever in an action before it, the respondent relies upon an arbitration agreement.
The judicial authority may, where the respondent before it relies on an arbitration
agreement, decide preliminary issues such as whether:
(i) There is no dispute in existence
(ii) The arbitration agreement or any clause thereof is null and void or in operative;
(iii) The arbitration is incapable of being performed
(iv) The arbitration agreement is not in existence
But the Court shall not decide the issues if:-

(a) The relevant facts or documents are in dispute;
(b) There is need to adduce oral evidence;
(c) The inquiry into these issues is likely to delay and reference to arbitration;
(d) The request to decide these issues was belated;
(e) The decision on these issues is not likely to produce substantial savings in costs
(f) There is no good reason as to why they should be decided.
7.3.1 Scope for Duplication For Arbitral Tribunals Eliminated – Sec. 8(3)
As it stands now, sec. 8(3) may lead to appointment of an arbitral tribunal by a party
while an application for appointment made by another party is pending before the judicial
authority.
Thus in some cases, the Commission has noted that two sets of arbitrators have been
appointed.
37
It is proposed to eliminate such contingencies by adding a proviso below sec. 8(3).
7.3.2 The Case before Judicial Authority Whether Is Stayed, If Reference Is Made –
Section 8(2)
The Act is silent on this issue. As in the English Act, 1996 it is proposed that once a
reference is made, the case before the judicial authority shall remain stayed.
7.3.3 If Arbitration Clause Is Void Etc., Scott Vs. Avery Clause Shall Not To Operate
Sec 8(6):
Scott vs. Avery clause is one which states that, if there is an arbitration clause, no
party can file an action in a court unless he first obtains an award.
It is proposed that where the arbitration clause is declared void etc., the Scott vs. Avery
clause will not apply.
7.3.4 Appointment of Arbitrators to Be On the Judicial Side

As at present, the Chief Justices and the Chief Justice of India or his nominees are
making appointments of arbitrators and it has been held by the Supreme Court that this is
done on the administrative side.
There are greater advantages if the appointment is to be made on the judicial side.
In fact, in the UNICTRAL Model Law, Art. 11 speak on appointment by „Court‟.
Almost all countries which follow the Model Law, require the „Court‟ to make
appointments, i.e., on the judicial side.
Once the appointment is not on administrative side, as proposed no writ will lie in the High
Court.
38
7.4. SUPREME COURT AND HIGH COURT MAY DECIDE

JURISDICTIONAL ISSUES BEFORE MAKING APPOINTMENT OF
ARBITRATORS UNDER SECTION 11
As under sec. 8, so under sec. 11, Supreme Court and High Court may decide
jurisdictional issues: sec. 11(13) & (14)
It is proposed that as under sec. 8, the above courts may decide jurisdictional issues, before
making appointment of arbitrators, but only
If no oral evidence is necessary,
All relevant documents are not in dispute,
Request is made without delay,
Inquiry into issues will not delay reference; and
There will be substantial savings in costs of arbitration.
7.5. PLACE OF ARBITRATION SHALL BE WITHIN INDIA SO FAR

AS ALL ARBITRATIONS UNDER PART I OF THE ACT ARE
CONCERNED
There appears to be a drafting mistake in sec. 20 in so far as it gives an impression
that in the case of a purely domestic arbitration between Indian national/companies, the
arbitration can be outside India.
This impression is given by the words „where the arbitration is in India‟ appearing
at the beginning of the section.
Taking undue advantage of the mistake, some companies incorporated in India have
been stipulating venues at London, even though the subject matter of contract or its
performance is in India and there is no foreign element
This drafting mistake was referred to by Dr. P.C. Rao in his Commentary. This is proposed
to be rectified.
39
7.6. TIME SCHEDULE FOR PLEADINGS, EVIDENCE AND

ARGUMENTS
Time schedule for Pleadings (sec. 23), Evidence and arguments (sec.24) Proposed
to be fixed by arbitrators for expediting arbitral process, subject to High Court rules to be
made under sec. 82:
It is proposed that the words in sec. 23 and 24 which enable „parties‟ (or their
counsel) to agree on time schedules be dropped but arbitrators would have to follow rules
to be framed by the High Courts for expediting arbitrations.
Chief examination could, under the proposals, be by way of affidavit
High Court has to make rules for purposes of sec. 23 and sec. 24 as to:
(i) Manner in which arbitral proceeding shall be conducted
(ii) Number of days for which the arbitration shall go on continuously on each occasion
when the arbitral tribunal meets
(iii) Number of hours on each day for which the tribunal has to sit
(iv) Procedure under sec. 29A
7.7. INDIAN LAW ALONE TO APPLY TO PURELY DOMESTIC

ARBITRATIONS BETWEEN INDIAN NATIONALS/COMPANIES.
Foreign law can apply only in case of an international arbitration in India
Here too, there appears to be a drafting mistake in sec. 28 of the Act. The basic principle in
all countries is that between the citizens of same country, the law of that country alone
would apply for resolution of disputes.
But unfortunately, the clause „where the arbitration is in India‟ is placed at the beginning of
sec. 28(1) which sub section deals with disputes between Indian nationals/companies.
The mistake in sec. 28 has enabled some companies to stipulate the place of arbitration as
outside India and that a foreign law would apply.
This has given an impression that even between such parties there is an alternative
situation where the arbitration can be outside India and therefore a foreign law could be
applied.
Hence sec. 28(1) is proposed to be amended by requiring only Indian law to be applied as
between Indian nationals/companies in case of domestic arbitration.
40
7.8. SPEEDING UP ARBITRAL PROCEEDINGS

New Section 29A and future arbitrations under the 1996 Act:
One year under the Act, plus the time that may be agreed by parties (subject to a
maximum of one year) and if the award is not passed within the said period, then the court
to monitor future procedure before the arbitrators till the award is passed, subject to the
rules to be made by the High Court under sec. 82:
The 1996 Act omitted fixing a time limit for the reason that extension applications in courts
under the 1940 Act were pending for months/years.
But absence of time limit is creating other problems of delay.
A new procedure is proposed to be prescribed under sec. 29A.
The Act will now give one year and then parties can extend up to a maximum of one year.
Then the arbitration proceedings get automatically suspended.
But the moment an application is filed in court for extension, either by party or by
the arbitral tribunal, the arbitral proceedings get revived – even before any notice is issued
in the application for extension.
The Court (i.e. District Court or High Court, (original side) shall pass orders from
time to time, fixing procedure and the dates etc. before the arbitrators, till award is passed,
subject to the rules proposed to be made by the by the High Courts.
7.9 TIME FIXED FOR COMPLETING PENDING ARBITRATIONS

UNDER THE ACT AS WELL AS UNDER THE 1940 ACT
In the case of those arbitrations under 1996 Act which are pending for more than 3
years, the Act proposes to give one more year, then the proceedings get suspended.
On an application filed in court, they get revived.
The court will monitor arbitral proceedings in accordance with procedure proposed
in sec. 29A, till the award is passed.
There is to be no stay at any stage, while granting extension of time.
In case 3 years have not passed by, such arbitrations under the 1996 Act are to be
completed within the remaining time out of three years plus another six months.
Thereafter the court will monitor as per sec. 29A.
Pending arbitrations under 1940 Act to be completed within one year (unless there is stay
by any court), – thereafter the court will monitor in accordance with procedure in sec. 29A:
41
7.10 SPEEDING UP PENDING APPLICATION TO SET ASIDE

AWARD AND APPEALS.
Pending applications for setting aside award under sec. 32 and appeals under sec.
37(1) of the 1996 Act to be disposed of within six months.
Appeals against interlocutory orders under sec. 37(2) to be disposed of within three months.
7.11 TWO EXTRA GROUNDS ARE PROPOSED, IN APPLICATIONS

UNDER SEC. 34 TO SET ASIDE THE AWARD.
Section 34A: In purely domestic arbitrations between Indian nationals/companies two extra
grounds are proposed, in applications under sec. 34 to set aside the award.
They are:
(i) Substantial question of law apparent on the face of the award – provided it was raised
before the arbitral tribunal and was referred to in the grounds.
(ii) Where reasons are not given in an award though under sec. 31(3) reasons are required
to be given.
These grounds will not available in the case of international arbitration in India.
7.12 MERE FILING OF AN APPLICATION TO SET ASIDE AN

AWARD NOT TO OPERATE AS A STAY OF THE AWARD.
Under the existing provisions of sec. 36, the mere filing of an application to set aside an
award operates as a stay of the award.
This is proposed to be rectified by stating that, unless court grants stay, award will
be enforceable.
Section 36: Filing of application to set aside award no longer to amount to stay of
award. Court may grant stay on conditions, taking into account the limited scope of
interference under sec. 34, 34A
42
7.13. FAST TRACK ARBITRATION

Chapter XI and sections 43A to 43D and Schedule IV
It is proposed that, notwithstanding other terms to the contrary in the agreement, parties can
agree for a single arbitrator.
They can agree even where proceedings are pending in any court.
The arbitration is to be completed in six months. In case it is not over, the
proceedings get suspended and get revived upon filing an application for extension
in the High Court.
The High Court will issue future dates and will monitor till the award is passed
following the procedure in sec. 29A.
There will be no stay by the High Court during the pendency of the application for
extension.
It is proposed that all applications to set aside award to be filed in High Court only and not
in District Court
The High Court should dispose of the applications within three months of service of notice
7.14. ARBITRATION DIVISION WITHIN EACH HIGH COURT TO

HEAR CHALLENGES UNDER SECTION 34,34A & 36
Arbitration Division in the High Court to deal with irrespective of pecuniary value with the
following:-
(i) Applications under sub-section (1) of section 34 to set aside awards (both new as well as
pending);
(ii) Appeals to set aside awards under the 1940 Act (new as well as pending);
(iii) Enforcement of awards under the Act (new as well as pending);
(iv) Execution of Awards under the 1940 Act (new and pending)
43
7.15. SPECIAL PROCEDURE FOR ENFORCEMENT OF FOREIGN

AWARDS THROUGH ARBITRATION DIVISION OF HIGH
COURTS SECTIONS 60A & 60B (CHAPTER III OF PART II)
The present procedure at two levels one on the subordinate courts or the High Court
on the original side and another by way appeal to the High Court has been simplified and
the proposed Arbitration Division will straight away deal with those cases.
Arbitration Division will follow case management procedures for fixing time schedules etc.
44
CHAPTER 8
CASE STUDY
8.1 INTRODUCTION OF THE CASE
8.1.1 Project Detail
 Name of the work-Construction of J.S.C. in Mangolpuri (Sarai Sahil), Kakrola

Dairy (MCD School), Kakrola Dairy (Opp.Park), Kakrola (Cremation
Ground). Kakrola( Harijan Basti). Rawta, Kharkhari Road, Gutnen Hera
Village (20-seats each) in Najafgarh Zone.
 Work Order No. EEVI/307 dated 12.10.2001
 Agreement No. EE(VI)/307 dated 27.11.2001
 Client name:-
Municipal Corporation of Delhi
Nigam Bhawan, Kashmeri Gate,
Delhi- 110006
 Contractor name:-
M/s Suresh Bros, Municipal Contractor
CP-2, Pitam Pura, Delhi-110088
 Accepted tender amount:- RS 93,76.096/-

 Duration of work: - 6month
 Start date: - 21/10/2001
45
8.2 SELECTION OF ARBITRATOR
Whereas, Shri Rakesh Mehta,, the then Commissioner, Municipal Corporation of Delhi by
virtue of powers vested in him under the relevant clause 25 of the agreement of the above
said works contract vide his letter No MWB & Accts/2004/345 dated 10.1.2005
appointed Er. O.P. Gupta,VSM, Retd.Chief Engineer as Sole Arbitrator to decide and
make his award only regarding the disputes/claims referred to him by M/s Suresh Bros. And
also regarding the counter claims of the MCD against the contractor referred to him
through EEVI, if any subject always, however, to their admissibility under clause 25 of the
agreement made in this behalf.
8.3 PARTIES INVOLVED IN THE ARBITRATION
M/s Suresh Bros, Municipal Contractor Claimant
Municipal Corporation of Delhi Respondent
(Through Executive Engineer (VI)
Representation:-
For Claimant Shri Ankit Gupta, Advocate Shri R.P. Singh,

Consultant
For Respondent Shri Vijay Gandhotra, Advocate
DATE OF AWARD: 20 October, 2006
46
8.4 PRE ARBITRATION DISCUSSIONS AND DECISION
Before the claims and counterclaims filed by both the parties are discussed and decided, it
is desirable that the preliminary objections/issues raised by both the parties are discussed
and disposed off which are as under:-
1. Submission of Certified Copy of the Agreement
The respondent filed the part copy of the Agreement on 22.3.2005 with copy to the
claimant which was illegible and incomplete. The respondent filed copy of the agreement
on 30.9.2005 with copy to the Claimant.
2. Counsel for the Parties
Shri Ankit Gupta, Advocate and R.P. Singh, Consultant filled their Vakalatnama on
15.3.2005 and 30.7 2005 respectively to represent the case of the claimant during the
arbitration proceedings as its counsel and consultant respectively, whereas Shri Vijay
Gandhotra, Advocate represented the case on behalf of the MCD after filing his
Vakalatnama on 15.3.2005.
3. Instructions/Directions Regarding Arbitration Proceedings/Case
The procedure for conduct of Arbitration proceedings was laid down, discussed and
approved with the consent of both the parties on 31.1.2005.
4. Fixing of Arbitration Fee
Arbitrator fee of Rs. 50,000/- as lump sum was mutually proposed and agreed to be shared
equally by both the parties during arbitration proceedings on 31.1.2005. Both the parties
have paid the share of their Arbitration Fee. The respondent has paid the last instalment of
Arbitration fee only in last week of July, 2006
5. Certified copy of the Final Bill
The respondent filed the photo copy of the abstract of the IX & final bill dated 26.3.2002
for the work completed on 20.3.2002 during the Arbitration proceedings on 30.9.2005 with
47
a copy to the claimant. On constant persuasion and assurances of respondent, he failed to

file the certified copy of the final bill recorded in the MB and duly accepted by the claimant
on 28.3.2002 as alleged by the respondent.
6. Execution of Extra/Substitute Items
As per terms and conditions of the work order, it is laid down that as and when orders are
given for execution of any extra/substitute items etc prior permission from the Competent
Authority should be obtained before executing the same to avoid any complication.
7. Nothing Extra to be paid for Cartage of Material
Under condition No. 3 of the General conditions of contract Agreement nothing extra will
be paid for the cartage of material unless otherwise specified in the items.
8. Rates for Different Items of works
The rates for different items of works shall apply to all height and depths unless otherwise
specified. (Refer to condition No. 11 of General conditions of contract agreement).
9. Claimant has no right for Raising Any Claims
The respondent has argued that the claimant has no right to raise any claims, because:
i.Claimant Accepted Final Bill as Full and Final Settlement of Account

ii. Claimant did not follow Procedure laid down under clause 25 of the
Agreement
iii. Claimant's undertaking in Form of Affidavit Dated 11 July 2005
10. Claim of Security & Claim of Interest-out of ambit of clause 25 of the

Agreement
11. Non-Availability of Funds
In reply to claims, the respondent submitted that the MCD in the present case is executing
agency on behalf of the Central/State Govt. Therefore, the claimant could not be paid due
to the non-availability of funds from the Central/State Govt. despite the best efforts made
by the respondent. The respondent further stated that the claims of the claimant are,
therefore, liable to be rejected out rightly. In the rejoinder, the claimant submitted that
48
arranging funds is the sole responsibility of the respondent. The claimant further states that
there is no mention in the agreement that the payment will be made only on receipt from the
Central./ State Govt.
After going through the agreement and other documents placed before the arbitrator he did
not consider justified to say that the claimant has no right to claim due payment till it is
released by the Central/State Govt because it is the responsibility of the respondent under
contract agreement to arrange funds for the work allotted and get executed.
12 Completion of work on 1.5.2002
In reply to claims, the respondent submitted that the work was partly completed on
30.3.2002(electrical work) and on 28.3.2002 (Civil work), whereas the final work was
completed on 1.5.2002 when test check by officer concerned at site. In the rejoinder, the
claimant referred to the office note dated 7.8.2003, which was submitted to the competent
authority for release of security, wherein actual date of completion was shown as
20.3.2002. He further added that the note bears the signatures of the AE, EE and SE,
wherein 75% security was released.
After going through the note dated 7.8.2003 as well as the abstract of copy of IXth & Final
bill, where the actual date of completion was given as 20.3.2002. Therefore, the arbitrator
holds that the date of completion for this work was 20.3.2002.
8.5 TABLE (8.1) ARBITRATION CALENDAR
Date Event
10.1.2005 Appointment of arbitrator
20.1.2005 Entered into the reference
31.1.2005 Arbitration proceeding was laid down and approved
22.3.2005 Submission of claims by claimant
30.9.2006 Submission of counter claims by respondent
20.10.2006 Award Given
49
The fourteen (14) sittings were held on 31.1.2005, 15.3.2005, 22.3.2005, 23.4.2005,
19.5.2005, 30.6.2005, 29.7.2005, 30.8.2005, 30.9.2005, 25.10.2005, 29.11.2005,
10.12.2005, 2.1.2006 and 3.2.2006.
8.5.1 Table (8.2) Submission of Claims
Submission of claims by claimant 22.3.2005

Reply of claims by respondent 30.9.2005
Rejoinder for reply to clause, by claimant 25.10.2005
Withdrawal/re-filing claims by respondent 29.11.2005
Rejoinder for amended reply to claims by claimant 10.12.2005
8.5.2 Table (8.3) Submission of Counter Claims
Submission of counter claims by respondent 30.9.2006
25.10.2005
Reply to counter claim by claimant
Withdrawal/Re-filing of counter claims by Respondent

29.11.2005
10.12.2005
Amended Reply to counter claims by claimant
2.1.2006
Rejoinder for Reply to counter claims by respondent
50
8.6 DETAILS REGARDING THE CLAIMS AND AWARDS
Claim no 1:-
This claim pertains Rs. 21, 33,000/- on Account of Work done, but not Paid due to
Pending Final Bill
 Claimant’s statement:-
The Claimant has raised a claim of Rs. 21, 33,000/- for the work done, recorded in
MB as final bill and accepted by him on 28.3.2002
In the amended rejoinder to claims on 10.12.2005 the claimant stated that the
respondent has released in August, 2005 the payment of Rs. 19, 91,469/- due to him under
claim No 1 of the accepted fir a bill after tempering the accepted final bill of the
claim/elated 28.3.2002. On query regarding tempering of the final bill, the claimant
submitted that the rate of agreement item No. 29 for Kota Stone flooring has been reduced
from Rs. 591.55 per sq. m to Rs. 463.80 per sq. m. The claimant further added that once
the rate is agreed and entered in the agreement, cannot be modified at all on the basis of
correction slip. The claimant further submitted that the final bill which was prepared and
accepted by him on 28.3.2002 and also paid to him prior to final bill was having rate for
this item of Rs. 591.55/- per sq.m. The claimant clarified that the balance amount of Rs. 1,
42,469/- (approcx) is due from the respondent as per final bill for the item No. 29 of the
agreement. He further added that this amount of Rs. 1, 42,469/-{approx) is not being paid
on account of change in rate of Kota stone flooring from Rs. 591.55 to Rs. 463.80 per. Sq.
m.
 Respondent’s statement:-
In reply to the claims, the respondent submitted that as per bid record, the
outstanding dues payable to the claimant for claim No. 1 & claim No 2 are Rs.
31,67,186/-, out of which claim of the claimant for claim No. 2, is Rs. 1,25,000/- (25% of
the security). Thus the claim amount for claim No 1 as per respondent statement shall
come to Rs. 30,42,186/-, whereas the respondent in his amended reply to claims on
51
29.11.2005 stated that no any dues are payable under claim No. 1. He further foiled to
give any details for Rs. 31, 67,186/-, stated to be payable to the claimant. On the other
hand the respondent stated that the rate of Rs. 463.80/- per sq m for agreement item No. 29
is being paid as per terms and conditions of the agreement which is based on CPWD, Delhi
scheduled of rates 1997 with correction slip No. 1 as applicable to this contract. The
respondent also failed to provide copy of the final bill of MB accepted by the claimant on
28.3.2002 despite instructions/ orders and persuasions.
 Arbitrator’s statement:-
After examining the contract agreement and its terms and conditions, the arbitrator
replied that according to General Conditions of contract conditions No. 1 lays down that
CPWD; Delhi Schedule of Rates 1997 with correction slips No. 1 to 4 will be applicable.
Whereas under condition No. 1, it is stated that in the case of deviation in the
nomenclature or in the rates of schedule, items, the rates and the nomenclature. CPWD
Delhi schedule of Rates 1997 with correction slips as detailed in correction slips No 1-4
will only prevail. In the present case the rate for item No. 29 of the agreement contract is
Rs. 591.55 per Sq m. while the rate for the said item as per correction slip No. 1 for
CPWD, Delhi schedule of rate is Rs. 463.80 per sq. m. as reported by the respondent and
agreed by the claimant.
 Arbitrator’s award:-
On going through the documents, agreement, pleadings of both the parties, the arbitrator
holds that the rate of Rs. 463.80 per. Sq. m. for Kota stone flooring paid in the final bill to
the claimant is in accordance with the term and conditions of the contract agreement. Thus
the claimant has no right to claim an amount of Rs. 1,42,469/- under claim No. 1 after
receipt of the payment of Rs. 19,91,469/- under Claim No. 1. Therefore, the claim of Rs.
1, 42,469/- under claim No. 1 was dismissed and rejected after due consideration.
52
 Comment:-
The contractor should have thoroughly gone through the contract document and he
should have understood the meaning of each and every clause, he should have taken the
clarification if he was having any doubt regarding the condition at the time of award of the
work. If he would have done this then he would have not landed to raise the claim on this
particular item and he could have quoted taking the risk into consideration and he would
have not suffered loss.
Claim no 2:-
This claim pertains Balance Pending Amount of Security' Deposit accounting to

Rs.1, 25,000/-
The claimant raised a claim of Rs. l, 25,000/-, (balance 25% of the security amount)
for the work completed on 20.3.2002. The claimant stated that 75% of security amount
of Rs. 5 lakhs has been refunded to him, while 25% (Rs. 1, 25,000/-) security amount is
still to be refunded. During the arbitration proceedings, the claimant in the amended
rejoinder on 10.12.2005 to the amended counter statement of claims of the respondent
submitted that the respondent has released and refunded the security amount of Rs. 1,
25,000/- due to him in November, 2005. He further stated that now he has no claim No. 2,
except claim of interest on amount of Rs. 1,25,000/-for the period from 20.3.2002(Date of
completion of work) to November 2005( Date of payment).
On going through the documents, admissions and pleadings of both the parties arbitrator
holds that the claimant has no claim under claim No. 2 after the payment of the same by
the respondent in November, 2005.
53
Therefore, the arbitrator dismissed contractors claim of Rs. 1,25,000/-under claim No. 2
and reject the same after due consideration.
 Comment:-
Since the amount has been released by the respondent on Nov 2005 the contractor has no
right to claim but he can claim for the interest that has to be paid by the respondent for the
delayed payment of security deposit.
Claim no 3:-
This is on account of bonus as per special condition of the work order which amounts
to Rs 1, 20,000/-
The claimant has raised a claim of Rs. 1,20,000/- as a bonus @ 1% of the gross amount
of work done as per terms and conditions of the contract, which lays down to pay bonus of
1% if the work is completed 1 month in advance and 1/2% if the work is completed 15 days
in advance. According to agreement the date/completion was on 20.4.2002 while the date
of Actual Completion was on 20.3.2002 as recorded in the MB for final bill.
The claimant draw the attention to the office note dated 7.8.2002 wherein approval for
refund of security was sought of the competent authority indicating date of completion as
20.3.2002.
The date of completion was not on 20.3.2002 and stated the date of completion was
May 2005, on the plea that the building was handed over by the claimant only in May 2005.
54
On going through the documents, pleadings of both the sides and as concluded in Para
12 above, the date of completion of the work was 20.3.2002 which holds that the claimant
completed work 1 month in advance of the stipulated date of completion i.e. 20.4.2002.
Therefore, as per terms and conditions of the contract agreement, the claimant is entitled
for a bonus @ 1% of the Tendered value and not the gross values of the work as claimed
by the claimant. As per agreement dated 27.11.2001, the tendered value for this work is
Rs. 93, 76,096/-.
Therefore, the arbitrator has awarded an amount of Rs. 93,760/- against a claim of
Rs. 1, 20,000/- in favour of the claimant and against the respondent.
 Comment:-
The claim put forth by the claimant was as per the conditions of the contract and the
decision taken by the arbitrator holds good since the claimant has supported his statement
with proper evidence. As the claimant has completed the work within stipulated time he has
been rightly awarded the bonus of 1% of the tendered value as per the conditions by the
arbitrator
55
Claim no 4:-
This claim pertains Rs.1, 51,555/- on Account of Reimbursement of Security

Amount and Installation Charges and Electricity p aid to DVB
The claimant raised a claim of Rs. 1,51,555/- as security and installation charges for
payment made by him towards security and installation charges for getting the electricity
connection for use of respondent in the 8 complexes as per details given in Annexure-2of
the statement. The claimant further stated that this entire amount of Rs 1,51.555/- was to
be re-imbursed by the respondent, which has not been reimbursed till date. Later on the
claimant did not press for this. On query the claimant informed that he has been re-imbursed
this amount and now there is no claim. He has not raised this claim in his amended
rejoinder dated 10.12.2005.
On going through the documents, pleadings of both the sides and the discussions of
the claimant the arbitrator holds that the claimant has no right to claim any amount,
because as per the claimant statement he has been paid all the dues under this claim No. 4.
The arbitrator has dismissed the claimant‟s claim No 4 and rejected the same after due
consideration.
 Comment:-
As the claimant has himself declared that the amount has been cleared by the respondent
this particular claim has been rightly rejected. In case if the respondent had not cleared the
bill then the claimant has the every right to claim the amount that has been spent for the
security and installation charge of electricity
56
Claim no 5:-
This claim related to Rs.3, 40,200/-(on Account of Watch and Ward of Khar Kari
Road Toilet Blocks Building)
The claimant has raised an amount of Rs. 3,40,200/- for engaging 3 Nos of
chowkidars for watch and ward of the Khar Kari Road toilet block, which the
respondent failed to take its possession after completion of its work on 20.3.2002 till
February, 2005 as per details given in the table
Table (8.4) Watch and Ward Calculation
Sr.
Period No of Chowkidars Rate Amount in Rs.
no
March 2002
1 3 100 1,08,000
to Feb. 2003
March 2003
2 3 105 1,13,400
to Feb. 2004
March 2004
3 3 110 1,18,800
to Feb. 2005
Total amount 3,40,200/-
In reply to the claim, the respondent while making preliminary objections under para
10 on the contrary stated that the claimant did not kept any watch and ward for the said
toilet block and handed over the same in May 2005. The respondent further stated that at
the time of taking over of the said toilet block, it revealed that various accessories i.e.
fans, sanitary parts, electrical appliances and meters were not found at the site, which
resulted a huge loss to the extent of R. 3,50,000/-(Approx). Thus the respondent raised a
57
counter claim of Rs. 3,50,000/- against the claimant, which will be discussed and decided,
while dealing with the counter claims of the respondent hereafter.
Further while replying the claim No. 5 in particular, the respondent stated about the
recovery of Rs. 41,889/- for the defective work, which is irrelevant and absurd. In the
rejoinder the claimant reiterated his claim.
On going through the documents placed before the arbitrator, the pleadings heard of
both the parties, the arbitrator holds that the claimant has failed to substantiate his claim
with proper evidence, notices and details and thus nothing was awarded under claim No. 5
Claim No. 5 was hereby dismissed and rejected after due consideration.
 Comment:-
For this particular claim the claimant should have provided the proper evidences,
because documentation and evidences plays a vital role during raising claims. The claimant
should have given proper notification to the respondent regarding the appointment of
chowkidars near the toilet blocks, if he would have done that then he would have been
suffered loss and he could have got the reimbursement through claims. The decision given
by the arbitrator holds good as proper evidences was not been produced by the claimant.
Regarding the counter claim of respondent will be dealt in counter claim part
58
Claim no 6:-
Rs. 60,000/- (on Account of Hire Charges of Rig Machine for Boring at village
Rawta and Gumenhera.)
The claimant has raised a claim of Rs. 60,000/- as hiring charges for the rig machine,
which remained idle for the period from 23.10.2001 to 23.11.2001 i.e. for 30 days as per
details given below:
(i) Hire "charges for Rig machine at
Village Rawta @ Rs. 1000/- per day Rs. 30,000/-
(ii) Hire charges foi Rig machine at
Village Ghuman hera @ Rs. 1000/- per day Rs. 30.000/-
Rs. 60,000/-
In support of his contention the claimant has referred Annexure C4 and C5, which are
briefly given here under:
Annexure C4
This is a letter dated 23.10.2001/ 23.9.2001 addressed to the respondent/EEVI,

wherein it is stated that the work at village Rawta and village Gumenhera cannot be done
due to non-availability of land, with the result the labour force was sitting idle.
Annexure C5
This is a letter dated 9.11.2001 in continuation of the claimant's letter dated 23.9.2001
addressed to respondent/EEVI reporting regarding non-availability of site resulting loss of
hire charges for boring machines and labour force which was sitting idle.
59
In reply to claims, the respondent has not given specific reply, rather tried to justify
respondent's claims of delay in making due payment, which is irrelevant, In rejoinder,
the claimant only reiterated his claims.
On going through the documents, pleadings by both the parties, the arbitrator holds
that the claimant has failed to substantiate his claim through evidences, notices and
any details. The annexure referred to C4 and C5 placed before the arbitrator as exhibits
have failed to prove the receipt of the same by the respondent. Rather the letter at
Annexure C4 bears two dates 23.9.01 and 23.10.2001 which leads to create doubt
about its correctness. Therefore arbitrator did not consider that the claimant has any right
for this claim.
Therefore, Claim No. 6 was hereby dismissed and rejected after due consideration.
 Comment:-
Once again claimant has failed to provide proper evidence that the machine and labour
force was idle for one month. If at all the labour force and machine was lying idle then this
issue should have brought to the notice of the respondent. As per claimant statement once he
has not got proper reply from the respondent he should have moved the labour force and the
hired machine. If at all his statement was true then he should have supported his statement
with proper evidence and documents. When the land was not available the claimant should
have not moved the labour force and machine till he has got the complete acquisition of
land. This was the fault of claimant and the decision given by arbitrator holds good
60
Claim no 7:-
Rs. 4, 58,400(on Account of Wages of Labour due to Idleness on Part of

Respondent)
The claimant has raised a claim of Rs. 4, 58,400/- on account of wages of labour due to
idleness on part of the respondent. As per statement of facts, the site of Rawta and
Ghumanhera was handed over to the claimant on award of work. The work, being of
urgent nature, was to be completed on priority. The claimant further added that he
deployed all-possible sources (financial as well as man-powers) for the completion of the
project well within stipulated date of completion. The claimant has referred Annexure
C-5 (letter dated 23.10.2001) in support of his contention. The claimant in his statement
of facts has also stated that the work of earth work, foundation concrete, brick work etc
was started at the above two sites, but got stopped by the respondent due to villagers
resistance on account of land disputes. Thus the labour engaged remained idle, which
resulted a loss of their wages. Therefore, the claimant raised this claim.
In reply to the claims, the respondent has reiterated his stand that the claimant has no
right to claim in view of the affidavit dated 11.7.2005 and statement made by the
claimant on 30.8.2005.
On going through the documents placed before the arbitrator and the pleadings of
both the parties, the arbitrator holds that the claimant has failed to substantiate his claim
with evidences, notices and details. The annexure C-5 referred in support of his contention
is neither maintainable nor justified as discussed under claim No. 6. The claimant has
61
arbitrarly raised claim of Rs. 4,58,400/-, which has no basis. Thus the claimant has no
right to this claim.
Claim No. 7 of Rs. 4, 58,400/- was dismissed and rejected after due consideration.
 Comment:-
The claimant should have taken the permission of the authority through a signed copy
before starting the work at both these villages and he should have maintained this document.
Before starting any work it was prime responsibility of the claimant to take the written
permission of the concerned authority and the claimant has even not mentioned for how
many days the labours were idle and he should have submitted the signed copy of the
measuring work done by the respondents authority for the work done if at all the work was
done so it could have been acted as part of evidence. This shows that how much important to
maintain the documentation at the project site. Hence the arbitrator award holds good for this
claim also.
Claim no 8:-
Rs. 5,75,424/- ( on Account of Left out Un-measured Work at Rawta &

Ghumanhera
The claimant has raised a claim of Rs. 5,75,424/- on account of left out and un-
measured work carried out by him up to plinth level ( i.e. earthwork ,CC, Brick work etc
and boring and lowering of tube well also completed as per directions of the respondent.
The claimant further stated that the work executed was dismantled by the villagers due to
62
dispute on land between respondent and the villagers. He added that these Items of works
executed were not measured and not paid to claimant as per details given in Annexure C-
6, which is reproduced here under:
Total cost 8 blocks Rs. 1, 15, 08,487/-
Cost of 1 block Rs. 14, 38,560/-
Cost of 2 blocks (Rawta and Ghuman hera Rs. 28,77,120/-
Less
(a) Electricity work Rs. 2,15,784/-

(b) Sanitary work @ 7.5 % Rs.2,15,784/-
( c) Water supply @ 5% Rs. 1,43,856/-
Rs. 5,75,424/-
Balance cost of 2 Blocks Rs. 23,01,696/-
25% work executed up to DPC Rs. 5,75,424/-
In reply to the claims, the respondent has reiterated his stand taken for claim No. 7
and stated that the claimant has no right to claim.
On going through the documents placed before the arbitrator and the pleadings made by
the parties, the arbitrator holds that the claimant has failed to substantiate his claim with
evidences, notices and the details. The claimant has also not taken any measurements of the
work executed by him and subsequently abundant due to change of sites. His claim is
arbitrary on the basis of the amount worked out on estimated cost on percentage basis. The
63
claimant has failed to prove that any work was executed at site. It was not understood
that when there was dispute of land at initial stages then why any work was undertaken
on at site. There is no basis for this claim.
Claim No. 8 of Rs 5, 75,424/- was hereby dismissed and rejected after due
consideration.
 Comment:-
Once the work was executed by the claimant then it was his prime responsibility to take
the measurement and to take the sign from the respective authority. As it was item rate
contract the claimant cannot claim on percentage basis. Once there was dispute between
respondent and villagers the claimant should have not started the work without written
approval from the respondent, if he would have taken written approval then he could have
claimed for the work done if it all it was executed. The claimant has no right to claim even if
he has executed as he was not able to produce proper evidence and notices for the work
executed. These mistakes from the claimant shows that written approval before starting any
work from the respective authority should be taken and the document should be maintained
with proper date. Hence the arbitrator award holds good for this claim also
64
Claim no 9:-
Rs. 3, 47,800/- (on Account of Left-out and Unmeasured Items)
The claimant has raised an amount of Rs. 3, 47,800/- on account of earth brought
from outside (from Haryana) for purpose of filling and banking etc at each site. He has
further stated that the earth, which is not available in NCT, was required to raise the land
level to avoid flooding of the area during rainy season. The claimant further added that the
earth so brought had neither been measured nor paid, which resulted this claim. The details
of claim as referred in Annexure C-7, is reproduced here under:
Total Area 480 Sq.m.x 8 = 3840 Sq. m.
Average thickness 60 Cm.
Total quantity supplied 0.60x 3840 = 2300 Cu.m.
Table (8.5) Earthwork Calculation
Sr no Item Quantity Rate (market) Amount

1 Supply of earth 2300 Cu.m Rs. 130/-per Cu.m Rs. 2, 99,000/-
(from beyond 20 Kms
load)
2 Filling in embankment 2300 Cu. m Rs. 21.20 per Rs. 48.760/-
under agreement item no. Cu.m.
2
3,47,760/-
Total amount
In reply to the claims, the respondent has reiterated his stand as taken for claim
No.7& 8 and stated that the claimant has no right to claim.
65
On going through the documents placed before the arbitrator and the pleadings made
by both the parties, the arbitrator holds that the claimant has failed to substantiate, his
claim with the evidences, notices and details. The claimant has also not taken any
measurement of earth and worked out the Quantity arbitrarily, which is neither
maintainable nor justified. Market rates had also arbitrary without any basis. This claim is
considered as an extra item, which the claimant was not required to do without permission
of the respondent as per contract agreement. The claimant has failed to prove that he had
done any work at site. Moreover, he has not placed any records of level taken at the site to
prove that the earth work and filling in embankment was required.
The arbitrator did not consider that the claimant has any right to the claim, which is
baseless, false and not maintainable. Therefore, claim No. 9 of Rs. 3, 47,800/- was
hereby dismissed and rejected after due consideration.
 Comment:-
It was well known from the agreement that extra item work should be executed with
prior approval from the authority; the claimant has failed to do that. The claimant should
have taken the levels and should have taken the signature of the authority and the permission
for backfilling if at all he had executed the work. Rates should have been discussed with the
authority and then the earth should have been brought for the filling purpose. It teaches
lesson that before executing any extra item work which is not in contract prior written
permission from the respective authority should be taken and then rates should be discussed
and then the work should be executed so that even when there is claim we will be having
proper evidence to substantiate the claims.
66
Claim no 10:-
Rs. 52,400/-(or Account of Cost of Left out and Unmeasured Work under
Agreement item No. 27 of Part B (Electrical Work)
The claimant has raised a claim of Rs. 52,400/- for supply and installation of 8
generators sets (one on each site) as per provision of agreement for which no payment, as
alleged, has been made to him. The claimant has further stated that the said work had
been done under the directions of the respondent
In reply to claims, the respondent has stated that the claimant has not supplied and
installed any DG sets and the same were arranged through an other agency. In the rejoinder
the claimant has not refuted to the statement of the respondent, except that the tube wells
are existing and functioning at site, which is not the question. The respondent has further
reiterated the same stand as for claim No. 7 & 8 and stated that the claimant has no right in
view of his affidavit dated 11 July, 2005 and undertaking dated 30.8.2005.
by both the parties, the arbitrator holds that the claimant has failed to substantiate his
claim with the evidences, notices and the details. The claimant further has also failed to
prove that any DG Set was provided at site. So much so while accepting the final bill on
28.3.2002, the claimant had not raised any objection for non-payment of this item. He had
also not refuted the statement of the respondent that the DG set work was got executed
through other agency.
67
The arbitrator did not consider that the claimant has any right to the claim. Claim No.
10 of Rs. 52.400/- was hereby dismissed and rejected after due consideration.
 Comment:-
If the claimant has provided the DG sets then he should have claimed the amount during
the final settlement of the bill but the claimant has not done that and even when the
respondent have addressed the letter that the work was executed by the other agency the
claimant did not refused hence claimant will not have right to claim. So this teaches that
arbitrary claim should not be claimed as this may spoil the future relation and whenever a
claim is made it should be provided with proper evidence. The award of the arbitrator holds
good even in this claim
Claim no 11:-
Rs. 54,078/- on Account of Left Out & Unmeasured Items under Agreement
Item No. 4&5 of Part A (Civil Work)
The claimant has raised a claim of Rs. 54,078/- on account of supply and
application of Chemical emulsion for agreement item No. 4 & 5.
In the rejoinder for reply to claims, the claimant has reiterated his claim, but not filed
any document or evidence in support of the claim. So much so the claimant has failed to
record any protest, while accepting the final bill on 28.3.2002.
68
In reply to the claim the respondent has stated that the claim is against the record of the
MCD/respondent and the same is liable to be rejected.
claim with proper evidences, notices and details. Therefore, he has no right to claim any
payment under claim No. 11.
Claim No. 11 of Rs. 54,078/- was hereby dismissed and rejected after due
consideration.
 Comment:-
Since there was no proper evidence on the chemical application that was done on the site
hence the claimant cannot claim for this particular item. The main mistake done by the
claimant here was that he has not maintained any documentation for the work done and
hence it proves that most of the claim done by the claimant is arbitrary
69
Claim no 12:-
Rs. 50,000/-(on account of Cost of Proceedings)
The claimant has raised a claim of Rs. 50,000/- on account of proceedings, because
the respondent compelled him to go for arbitration for getting his justified payments, which
the respondent with-held for no fault of the claimant after the acceptance of final bill by
the claimant on 28.3.2002.
In reply to claim the respondent refuted and stated that it is the claimant, who had
dragged him to arbitration. The learned counsel for the respondent on the contrary
raised a counter claim of Rs. 30,000/- on this account, which will be dealt with hereafter
under counter claims of the respondent.
by both the parties, the arbitrator holds that the claimant has a right to claim cost of
arbitration proceedings, because the respondent kept his legitimate claims unpaid for a
pretty long time, which compelled the claimant to invoke arbitration clause 25 of the
Contract agreement.
Therefore, the arbitrator awards an amount of Rs. 25,000/- as cost for arbitration for
the claim against a claim amount of Rs. 50,000/- in favour of claimant and against the
respondent.
70
 Comment:-
As it was the fault of respondent for not making the payment on right time and holding
the legitimate amount for a longer period the claimant has every right to claim for the
arbitration proceedings. This teaches that if the legitimate payment has not been made at
proper time then the claimant has every right to claim for the cost of proceedings which will
be going to take on at the later stage. The arbitrator award holds good for this claim.
Claim no 13:-
Rs. 15, 00,000/- (approx) on Account of Interest on Due Payment
The claimant has raised a claim of Rs. 15,00,000/- @ 18% per annum on the amount
due to him w.e.f. 20.3.2002.(date of completion of work) till date of payment. The claimant
has further stated that the respondent with-held his justified payment in an unlawful
manner, which extended financial loss to the claimant.
. In reply to the claims, the respondent has objected to the payment of any interest
on the due amount on the plea that the respondent was an executing Agency. He further
added that the work was executed on behalf of the Union Govt. Qua Govt. of NCT of
Delhi under Yamuna Action Plan for which the requisite funds and grants were to be
received from the Govt. of India, Govt. of NCT of Delhi and World Bank. The respondent
further stated that as per practice in the MCD, the contractors are paid as per priority drawn
by the Chief Accountant in accordance with the availability/release of funds from the
Govt. The learned counsel for the respondent argued that therefore claim of interest of the
claimant is not justified, because the respondent is not instrumental in delaying the
payment to the claimant and hence this claim of interest be dismissed.
71
Ongoing though the documents placed before the arbitrator and the pleading made by
both the parties, the arbitrator holds that the claimant has right to claim interest on the
due amount decided on arbitration, because the stand taken by the respondent is
neither maintainable nor justified. The rate of interest @18% per annum claimed by the
claimant is not reasonable. The arbitrator holds to allow an interest @ 12% per annum on
the due amount. Further the period w.e.f. 20.3.2002 till date of payment is also not justified.
The arbitrator allowed payment of interest for the period from the date the claimant has
raised interest till the date of payment on the due amount. The claimant has raised
interest on Submission of his claim on the arbitrator‟s entrance into reference i.e.
20.1.20005. Therefore, the claimant has no right to claim pre-suit interest.
In view of above discussions, the amount of interest payable to the claimant on the
amount due and for the period allowed is as under:
Claim No. 1:- Amount of claim paid to Claimant Rs. 19, 91,469/- Date of
payment- 5 August, 2005
Amount of claim paid to claimant of Rs. 19, 91,469/- was on 5 August, 2005, where
as the claimant raised claim of interest on arbitrator entrance into reference on 20.1.2005.
Thus the period of interest is from 20.1.2005 to 5 August, 2005 i.e. 198 days.
Therefore interest Payable =19, 91, 469 x 198/365x 12/100= Rs 64.541/-
72
Claim No. 2:-Amount of Claim paid to Claimant-1, 25,000/-, Date of

Payment-28 Nov. 2005
The claimant has been paid amount of Rs. 1,25,000/- on 28 Nov. 2005, whereas the"
claimant raised interest on arbitrator entrance into reference on 20.1.2005. Thus the
period of interest is from 20.1.2005 to 28 Nov. 2005 i.e. 313 days. Interest payable is
1, 25,00x 313/365x12/100 = Rs 12,683/-
Claim No.3:- Amount of Claim Payable to Claimant -Rs. 93,760/
The claimant has raised interest on arbitrator entrance into reference on 20.1.2005.
Thus the period of interest is from 20.1.2005 to 20.10.2006 i.e. 639 days.
Therefore, interest payable= 93,760/- x 639/365 x 12/100 - Rs. 19697.30 Say Rs.
19,697/-
Total interest worked out & Payable = 64,541 + 12863 + 19697 = Rs. 97101/-
Total Amount of Claim Awarded in favour of Claimant
Claim No. 3 (Bonus) Rs. 93,760/-
Claim No. 12 (Cost of Arbitration) Rs. 25,000/-
Claim No. 13 (Interest) Rs. 97,101/-
Total Rs. 2, 15,861/-
Comment:-
This teaches us that the rate interest that should be quoted should not be unreasonable but it
should be as per the prevailing rate of interest fixed by RBI. Based on this the calculation
should be done.
73
8.7 RESPONDENTS COUNTER CLAIM
Counter Claim no 1:-
Rs. 3,50,000/- on Account of Losses due to delay in Handing over the

Possession of CTC site Code No. 408 situated at Khar Khari Road.
The respondent has raised a counter claim of Rs. 3,50,000/- (Aprox) on account of
delay in handing over the possession of the above said CTC site, which resulted missing of
various accessories such as fans, sanitary parts, electrical appliances and motors. The
respondent stated that the work, which was completed on 20.3.2002, was handed over only in
May, 2005. The respondent further stated that the respondent had also met with the losses
due to no-receipt of lease money from Concerned NGOs @ Rs.25/- seat per month for the
period from 1.4.2002 to 31.5.2005.
In a rejoinder for reply to claims, the claimant stated that the respondent never
informed about any losses at any stage even after expiry of defect liability period. Hence,
the respondent's objections does not stand anywhere in the law. The claimant further stated
that the counter-claim of the respondent is baseless. The claimant added that after
completion of the work, it is respondent's responsibility to keep watch and ward of the
site. Hence, no counter-claim of the respondent is maintainable.
by both the parties the respondent has failed to substantiate his counter-claims with
evidences, notices and details. It was not understood that why no action was taken
74
against the claimant for the losses referred? Why the respondent failed to take over the site
when the work stands completed on 20.3.2002
The respondent stand was neither justified nor maintainable. Hence counter claim
of RS3, 50,000 was hereby dismissed and rejected.
 Comment:-
If at all the respondent has occurred loss then he should have taken action against the
claimant and the losses could have been recovered from the successive bills. Even while
making final payment the respondent could have taken action and moreover when the work
was completed the respondent should have taken over the site so that there was no chance of
losses at that time. This teaches us that after handing over of the site proper attention should
be there so that no theft occurs and security guards should be appointed. If it was fault of the
contractor then recovery of that loss can be done through his running bills.
Rs. 30,000/- on Account of Arbitration Cost
The respondent has raised a counter claim of Rs. 30,000/- on account of

Arbitration Cost on the plea that there is nothing arbitral under clause 25 of the
agreement. He further stated that the claimant has unnecessarily dragged the
MCD/respondent in this arbitration, which has resulted additional expenditure of the
respondent.
75
counter-claim with any evidences, notices and details. It is the respondent who has
forced the claimant for the arbitration due to not making the due payments to him
Counter-Claim No 2 of Rs. 30,000/- was hereby dismissed and rejecte after due
consideration.
 Comment:-
It was respondent who dragged the claimant to go for arbitration by not making the
legitimate payment and hence the respondent has no right to claim for the cost of
proceedings. This teaches us that timely payment should be made to avoid from the
arbitration case and claims. The arbitrator decision holds good for this claim
Rs. 5, 00,000/- on Account of Counter Claim
The respondent has raised a counter claim of Rs. 5, 00,000/- against the claimant.
In rejoinder for reply to claims of the respondent, the claimant objected to this counter -
claim and submitted that the counter-claim has no evidences and details. He further stated
76
that the respondent has fired the gun in air to create noise in calm atmosphere and to
threat the claimant, so that the claimant could be pressurized to withdraw his justified
claim. He, therefore, added that the claim of the respondent be rejected and dismissed.
by both the parties, the arbitrator holds that the respondent has failed to substantiate his
counter-claim with any evidence, notices and details. Mere statement of the respondent for
a counter claims of Rs. 5, 00,000/- is neither justified nor maintainable. The arbitrator did
not consider that the respondent has any right to this counter-claim.
Therefore, counter-claim No. 3 of Rs. 5, 00,000/- of the claimant was hereby

dismissed and rejected after due consideration.
 Comment:-
The respondent has raised counter claim without any base which has been not justified
with proper evidence. This teaches us that only by mere statement claims cannot be done
and award for that claim will not be done based on mere statement.
77
Future Interest (a), 12% per annum
The respondent has raised a counter-claim of future interest 12% on the amount of
counter-claim awarded to him.
None of the counter-claims of the respondent has succeeded. So the question of

award of any future interest @ 12% or any rate of interest does not arise.
Hence counter-claim of future interest at12% per annum was hereby dismissed
and rejected after due consideration. All the 4 counter-claims of the respondent stand
dismissed and rejected and nothing is awarded in favour of respondent.
 Comment:-
In this case none of the claim was awarded hence there will be no question of future
interest that can be claimed by the respondent. Future interest will not be awarded for the
respondent
78
Table (8.6) Summary of Contractor Claims (Claimant)
Claim no Description Arbitrator award

1 Rs. 21,33,000/- on Account of Work done, The arbitrator holds that the rate
but not Paid due to Pending Final Bill of Rs. 463.80 per. Sq. m. for
Kota stone flooring paid in the
final bill to the claimant is in
accordance with the term and
conditions of the contract
agreement. Thus the claimant has
no right to claim an amount of
Rs. 1,42,469/- under claim No. 1
after receipt of the payment of
Rs. 19,91,469/- under Claim No.
1.
2 Arbitrator holds that the claimant
Rs.1, 25,000/- on account of Balance
has no claim Under claim No. 2
Pending Amount of Security' Deposit.
after the payment of the same by
the respondent in November,
2005.
3 As per terms and conditions of
Rs. l,20,000/-on Account of Bonus as per the contract agreement, the

Special Condition of the Work Order claimant is entitled for a bonus
@ 1% of the Tendered value and
not the gross values of the work
as claimed by the claimant
4 The arbitrator holds that the
Rs.1,51,555/- (on Account of
claimant has no right to claim
Reimbursement of Security Amount
any amount, because as per the
and Installation Charges and
claimant statement he has been
Electricity paid to DVB
paid all the dues under this claim
No. 4. Hence the claim was
dismissed.
79

Rs.3,40,200/-(on Account of
claimant has failed to
Watch and Ward of Khar substantiate his claim with

proper evidence, notices and
Kari Road Toilet Blocks details and thus nothing was
awarded under claim No. 5
(Building)
6 The annexure referred to C4 and
Rs. 60,000/- (on Account of Hire C5 placed before the arbitrator as

Charges of Rig Machine for Boring at exhibits have failed to prove the
village Rawta and Gumenhera. receipt of the same by the
respondent. Hence claim will be
rejected
7 The annexure C-5 referred in
Rs. 4,58,400( on Account of Wages of support of his contention is

Labour due to Idleness on Part of neither maintainable nor justified
Respondent as discussed under claim No. 6.
Thus the claimant has no right
to this claim.
8
It was not understood that when
Rs. 5,75,424/- ( on Account of Left out Un-
measured Work at Rawta & Ghumanhera there was dispute of land at
initial stages then why any work
was undertaken on at site. There
is no basis for this claim. Claim
No. 8 of Rs 5,75,424/- was
hereby dismissed and rejected
after due consideration.
9 The arbitrator did not consider
Rs. 3,47,800/-(on Account of Left-out that the claimant has any right to
and Unmeasured Items the claim, which is baseless,
false and not maintainable.
10 The arbitrator did not consider
Rs. 52,400/-( or Account of Cost of Left
80
out and Unmeasured Work under that the claimant has any right to
Agreement item No. 27 of Part B the claim, because While
(Electrical Work) accepting the final bill on
28.3.2002, the claimant had not
raised any objection for
nonpayment of this item.
11
Rs. 54,078/- on Account of Left Out & The arbitrator holds that the
Unmeasured Items Under Agreement claimant has failed to
Item No. 4&5 of Part A substantiate his claim with
proper evidences, notices and
details. Therefore, he has no
right to claim any payment under
claim No. 11.
12 The arbitrator awards an

Rs. 50,000/-( on account of Cost of
amount of Rs. 25,000/- as cost
Proceedings)
for arbitration for the claim
against a claim amount of Rs.
50,000/- in favour of claimant
and against the respondent.
13
Rs. 15,00,000/- (approx) on Account Total interest worked out &
of Interest on Due Payment Payable = 64,541 + 12863 +
19697 = Rs. 97101/-
81
Table (8.7) Summary of Clients Counter Claims (Respondent)
Claim no Description Arbitrator award

1 The respondent stand was
Rs. 3,50,000/- on Account of Losses due
neither justified nor
to delay in Handing over the Possession of
Maintainable. Hence
CTC site Code No. 408 situated at Khar
counter claim of
Khari Road
RS3,50,000 was hereby
dismissed and rejected.
2 . It is the respondent who has
Rs. 30,000/- on Account of Arbitration
forced the claimant for the
Cost
arbitration due to not making the
due payments to him
Rs. 5,00,000/- on Account of Counter
respondent has failed to
Claim
substantiate his counter-claim
with any evidence, notices and
details. Therefore, counter-
claim No. 3 of Rs. 5,00,000/- of
the claimant was hereby
dismissed and rejected
4 Future Interest (a), 12% per annum None of the counter-claims of
the respondent has succeeded.
So the question of award of
any future interest @ 12% or
any rate of interest does not
arise.
82
CHAPTER 9
CONCLUSIONS AND RECCOMENDATIONS
 CONCLUSION
The issue could have been sorted out without arbitration if both the client and
contractor would have maintained proper co-ordination between them in sorting out the
financial matter. The issue would have been sorted in short duration if the client would
have paid the due amount in time.
The unnecessary claim put forth by the contractor is also not correct, because without
any proof and evidence the contractor has made more number of claims than the real one
which may also lead to the spoiling of relationship in future. Because of this unnecessary
claim the client have also made counter claims to overcome the claims made by
contractor, which also does not have proper evidence. This implies that there was no
proper co-ordination and communication between the contractor and client. Proper
documentation was not maintained by either of them during the execution of the project
because of this both the parties were not to able to prove or justify their claims.
If proper documentation and correspondences had been maintained and timely

payment had been done then there would have not been the question of arbitration. So its
very essential to maintain the documents with proper approval from the authority so that
there will not be any issues in future.
Arbitration is a practical mode for settlement of construction dispute and still remains
less expensive as compared to litigation in the court. In order to make this system
purposeful the arbitrators selected should be men of high integrity professionally
competent having fair knowledge of arbitration system and well conversant with the
business in which the dispute lies. The parties must be honest in projecting their claim and
counter claim and should produce all facts/ information/ documents along with their
submissions.
83
 RECOMMENDATIONS
Persons who are familiar with the nature of disputes frequently arising
out of construction contracts and who are of good reputation and recognised
competence be appointed as arbitrators by appointing authorities. For this purpose
retired officers who fall in this category should not be excluded.
For speedy settlement of disputes between two public sector undertakings
or between Govt. departments and public sector undertakings, Department of Public
Enterprises may establish a panel of arbitrators for construction contracts instead
of the existing arrangement of arbitration by officers(s) of Ministry of Law.
Proper training courses be involved and conducted by different
organisations and Professional Institutions like Institution of surveyors to impart
knowledge in arbitration and in procedure connected herewith. The Indian Council
of Arbitration may also conduct some training courses on construction contracts.
The arbitrator should conduct proceedings diligently by first holding a preliminary
hearing after appointment for issues of definite directions for completion of
documentation and framing of issues, where necessary, and thereafter have
recourse to regular continuous hearing as far as possible, till close of proceedings
on all matters in dispute referred to him. The Arbitrator should then make the
award as speedily as possible.
Alternative Dispute Resolution methods of committees, conciliators/ mediators,
may be built in contract with a view to resolving disputes speedily to the extent
possible before either party takes recourse to arbitration or litigation.
Resort to arbitration as a method of resolving disputes including, in particular,
institutionalised arbitration should be encouraged.
Uniformity of arbitration law in the country should be favoured instead of having
multifarious state enactments which affect performance of construction industry'.
The structure and working by the arbitration tribunal set up by certain states does
not appeal to be satisfactory.
Proper documentation and correspondences should be maintained for smooth
running of the project and it also helps to justify the statements of claims of either
party during settlement of bills/ during arbitration proceedings
84
BIBLIOGRAPHY
Books
• S.k.chawla, “law of arbitration and conciliation”, eastern law house, 1998.
• Nabhi kumar jain, “business laws", a Nabhi publication, 1996.
• “The arbitration and conciliation act,1996”
• Gajria, Kishore, "Law Relating to Building and Engineering Contracts in

India", Butterworths,2000
Web links
• www.laws4india.com
• www.arbitration.indlaw.com
• www.iccarbitration.org
• www.arbitration.indlaw.com
• www.lcia.org
• www.interarb.com
• www.adr.org
Paper:-
• Paper from seminar on dispute resolution and role of consultant- 15- Mar- 2003
organized by International council of consultant in Delhi.
• Paper On “ Courts On Appointment Of Arbitration To Adjudicate Dispute

Between Parties In Construction Industry” – A Case Study- Sep.2009 Journal of
ICC
85

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Study on Arbitration and Settlement of Disputes in Infrastructure Project- A Case Study

1.1 HISTORY OF ARBITRATION

Hindu civilization expressly encouraged the settlement of difference by tribunals

The United Nations Commissions on International trade law adopted the

1.2 OBJECTIVES OF THE STUDY

To study about Arbitration in Construction Companies.

To Study various ADR Mechanisms.

To Analyze case study of an Infrastructure project related to Arbitration

1.3 SCOPE OF THE STUDY

1.4.1 Formulating Project Topic

• The selected topic should have some current implications.

• The selected topic should contribute to knowledge in the desired field.

1.4.2 Extensive Literature Survey

1.4.3 Preparing Design

The means of obtaining the information

1.4.4 Collection of Data

There are two types of data collection

1) Primary data collection

1.4.5 Execution of Project

1.4.6 Analysis of Data

There are four steps for analyzing the data

After coding the data can be classified easily

1.4.7 Interpretation and Conclusion

1.4.8 Preparation of Report

The report had been prepared in the following pattern

The main text of report should have the following parts

1.5 STUDY SYNTHESIS

Chapter 2: Review of Literature

Chapter 4: Alternate Dispute Resolution Mechanism

This chapter emphasizes mainly on different types of alternate dispute resolution

Chapter 5: Domestic Arbitration

Chapter 6: International Arbitration

Chapter 7: Salient Features of the Arbitration and Conciliation (Amendment) Bill

Chapter 8: Case Study

Chapter 9: Conclusions and Recommendations

Most nations accept that excessive regulation of dispute resolution hinders

2.1THE INDIAN LAW

2.2CAUSES FOR CHANGE OF THE LAW

2.3 IMPORTANT FEATURES OF THE ARBITRATION AND

Chapter 1 bears the title „general provision‟

Chapter 2 bears the title „arbitration agreement‟

Chapter 3 bears the title „composition of arbitral tribunal‟

Chapter 4 bears the title „jurisdiction of arbitral tribunal‟

Chapter 5 bears the title „conduct of arbitral proceedings‟

Chapter 7 bears the title „recourse against arbitral award‟

Chapter 8 bears the title „finality and enforcement of arbitral awards‟

Chapter 9 bears the title „appeals‟

Chapter 10 bears the title „miscellaneous‟

2.4 THE ENGLISH LAW

2.4.1 Law Prior To The English Arbitration Act 1996

2.4.2 Causes for Change of the Law

2.4.3 What Follows Highlights Some Of The Major Reasons.

2.4.4 Comparison between the Indian and the English Acts

What is arbitration'' and "Who is an arbitrator" are question which although of

An 'Arbitrator' is a private extraordinary judge between parties, chosen by their

3.2 NEED FOR ARBITRATION:

A dispute or difference shall be deemed to arise when a claim/assertion made by

In order to avoid any disruptive effect on progress & quality of work, it is

3.3 GROWTH AND DEVELOPMENT OF ARBITRATION

3.4 WHY ARBITRATION IS PREFERRED TO LITIGATION

1) Expertise: an arbitrator is normally selected for his expert knowledge of a

3) Convenience: an arbitrator normally arranges for a hearing, if one is necessary at a

4) Expedition: whether the dispute is resolved without delay by arbitration depends