Techno Legal Cell

Settlement of Disputes through Arbitration

Clause 25 of the Standard Forms PWD 7 & 8 and other relevant clauses in other forms provides for appointment of an Arbitrator, in case of disputes arising out of the contract at any stage between the parties to the contract. It is the term of this Clause that the arbitration shall be conducted in accordance with the provision of Arbitration & Conciliation Act 1996 (26 of 1996). The provision of Arbitration Clause 25 can be invoked by the contractor as well as by the Engineer- in- Charge. On receipt of request of the claimant for appointment of an Arbitrator, the Chief Engineer or Head of the Department, in the absence of a Chief Engineer, appoints an Arbitrator within 30 days from the receipt of such request as contained in Section 11 of Arbitration Act 1996. If the CE fails to appoint an Arbitrator within 30 days, then the appointment can be made, upon the request of the party, by the Chief Justice or his designate.

Request for Appointment

The contractor gives a list of all disputes to the CE. Except the action taken under Clause 2 for levy of compensation for delay in execution of work and other clauses where exceptions have been provided, all the disputes are referred to the Arbitrator. The contractor cannot have re-course to Court of Law for redressal of his grievances unless he has exhausted the channel of arbitration. Such request for appointment of Arbitrator is to be made within 120 days of the intimation to the contractor about preparation of final bill or within 30 days of rejection of his claims by the CE.

Appointment and Award with Reasons

The Government of India have appointed a panel of Arbitrators in the Ministry whose offices are located in New Delhi, Mumbai & Kolkata. Generally, the disputes are referred to the Sole Arbitrator out of one of them. In case where empanelled arbitrator is not available, the CE/DG(W) appoints any other CE who is not related to the work, as Sole Arbitrator. The person thus appointed becomes the sole arbitrator and his award is binding on all the parties unless it is set aside by the Court. The sole Arbitrator gives separate award against each claim and in all cases if the total amount of all claims in dispute is Rs. 1 lac and above, the Arbitrator has to give reasons for the award.

The authority of the appointed Arbitrator does not become revocable except with the order of the Court. The sole Arbitrator shall adjudicate the matter within 4 months . However this period is extendable with the consent of both the parties.

The Arbitrator writes the award on stamp papers (Non Judicial) and record reasons where total amount of disputes exceeds Rs. 1.0 lac and publishes the award. After publication of award it is examined whether it is acceptable to the Govt. or not. Upon examination of the award, if the Department is of the opinion that the award should be challenged, the advice of Ministry of Law is obtained and action is taken on the basis of their advice generally.

Limitation Time for Appeal

The application for correction of award under Section 33 is required to be made within a period of one month from the receipt of award. The application for setting aside the award is to be made within 3 months. Further, if however, the court is satisfied it can condone the delay of 30 days but not thereafter. Under Act of 1940, the award was only enforceable by the leave of the court and after making a decree. But in the Act of 1996, the Arbitrator’s award is deemed to be a decree of Court after a period of 3 months has elapsed and no application can be made for challenging the arbitration award.

Techno Legal Cell headed by Superintending Engineer, attached with the CE (CSQ), handles all Arbitration cases and related matters, where the claim amount exceeds Rs. 10 lakh. The SE (TLC) at HQ looks after the cases of New Delhi & Delhi regions. The cases of other regions are looked after by SE (TLQA) of concerned region. SE(TLC) at HQ also handles acceptance and challenge of award which falls in the powers of ADG(S&P) and ADG(TD).

The powers for acceptance or challenging arbitration award to officers are given below:

CE - Award amount i/c interest - 7 Lakh

ADG - -do- - 20 Lakh

DG(W) - -do- - Full powers

Section 36 of CPWD Manual Vol. II deals this matter in detail. A very large number of cases are being handled by the officers of this department which consumes the precious working time and other resources.