V. K. CONSTRUCTIONS WORKS LIMITED v. AIR FORCE NAVAL HOUSING BOARD
1990-11-27
P.K.BAHRI
body1990
DigiLaw.ai
P. K. Bahri ( 1 ) THIS is a petition under Section 20 of the Arbitration Act. I produced to dispose of this petition on merits as arguments have been advanced by the learned counsel for the parties for disposing of the petition on merits. ( 2 ) RESPONDENT No. 1 had entered into a contract dated May 25, 1982 by which the construction of civil works of 552 residential units in phase-I of the Group Housing Project at NOIDA (U. P.) at the site located at Section 21 NOIDA (U. P.) was assigned to the petitioner. The petitioner has pleaded that disputes have arisen between the parties out of the said contract and they are enumerated in annexure a . There exists admittedly arbitration clause in the contract which is to the following effect: "5. 39. All disputes and differences of any kind whatever arising out of or in connection with the contract or the carrying out of the works (whether during the progress of the works or after their completion and whether before or after the determination, abandonment or breach of the contract), shall be referred to and settled by the Architect who shall state his decision in writing. Such decision may be in the form of a final certificate or otherwise. The decision of the Architect with regard to any of the excepted matters shall be final and conclusive and no evidence to the contrary shall be permitted to disprove the same.
Such decision may be in the form of a final certificate or otherwise. The decision of the Architect with regard to any of the excepted matters shall be final and conclusive and no evidence to the contrary shall be permitted to disprove the same. (b) But either the Owner or the Contractor the dissatisfied with the decision of the Architect on any matter, question or dispute of any kind (except any of the excepted matters) or as to the withholding by of the Architect any Certificate to which the Contractor may claim to be entitled, then and in any such case either party (owner or the contractor) may within 28 days after receiving the notice of such decision give a written notice to the other party through the Architect only, requiring that the matter (s) in dispute should be arbitrated upon, such written notice to specify the matters which are in dispute or differences of which such written notice has been given, and no other shall be and is hereby referred to the sole arbitration of an arbitrator to be nominated by the Chief of the Air Staff or the Chief of the Naval Staff, whose decision shall be final and binding upon all parties concerned. It is hereby expressly agree that the sold arbitrator shall not be disqualified by reason of the fact that he had on an earlier occasion dealt with the matter in dispute on the administrative side. In case the officer nominated as the sole arbitrator neglects or refuses to act or is transferred or is not available, the Chief of Air Staff or the Chief of Naval Staff, shall nominate another officer in his place who shall proceed with the arbitration from the stage the arbitration proceedings were last left. (c) The sole arbitrator shall give his decision after submission to him by the parties of their respective claims/defences in writing and after affording oral hearing to them, if so required by the parties. It shall not be necessary or obligatory for the arbitrator to record any evidence, documentary or otherwise, or any statements under which he shall be entitled to give his award on the basis of the oral statements made by the parties and the record of the work produced before him.
It shall not be necessary or obligatory for the arbitrator to record any evidence, documentary or otherwise, or any statements under which he shall be entitled to give his award on the basis of the oral statements made by the parties and the record of the work produced before him. (d) Upon every or any such reference, the cost of and incidental to the reference and a award respectively shall be in the direction of the Arbitrator, who may determine the amount thereof, or direct the same to be taxed as between attorneys and client or as between party and party, and shall direct by whom and in what manner the same shall be borne and paid. This submission shall be deemed to be a submission to Arbitration within the meaning of the Indian Arbitration Act, 1940 or any statutory modification thereof. The award of the arbitrator shall be final and binding on the parties. Such reference except as to the withholding by the Architect of any Certificates under clause 5. 6, to which the Contractor claims to be entitled shall not be opened or entered upon until after the practical cessation of the works arising from any cause unless with the written consent of the Owner and the Contractor. Provided always that the Owner shall not withhold the payment of any Interim Certificate nor the Contractor, in any way delay the carrying out of the works by the reason of any such matters, question or dispute being referred to Arbitration, put shall proceed with the work with all due diligence and shall, until the decision of the Arbitrator to be given, abide by the decision of the Architect and no award of the Arbitrator shall relieve the Contractor of his obligations to adhere strictly to the Architects instructions with regard to the actual carrying out of the "works. The Owner and the Contractor hereby also agree that Arbitration under this clause shall be a condition precedent to any right of claim under the contract. It is also a term of the arbitration in respect of any claim (s) in writing within ninety days of receiving intimation from Owner that payment upon Architects Certificate is ready, the claim of the Contractor shall be absolutely waived and time barred and the Owner shall be discharged and released from all liabilities under the contract in respect of these claims.
( 3 ) ACCORDING to the petitioner, he in accordance with the aforesaid clause had submitted his claims to respondent No. 2 who was to initially act as arbitrator for deciding the claims of the petitioner and he had sent those disputes to respondent No. 2 on March 18 1988, and had sent a reminder dated April 4, 1988, but with no response and treating that respondent No. 2 has declined his claims, he set registered letter dated April 23, 1988, for reference of the disputes to the arbitrator to be nominated in accordance with the arbitration clause. As the arbitrator was not nominated the petition was filed in court under Section 20 of the Arbitration Act for appointment of an independent arbitrator by the court. In the amended reply filed to thepetition it has been pleaded that the petitioner had not moved for getting the arbitrator appointed within 28 days of the rejection of the claims of the petitioner by respondent No. 2 and thus, the arbitration clause now cannot be invoked. However, on merits a plea has been taken that respondent No. 2 has entered upon the disputes for giving a decision and it took time and ultimately he had decided the claims of the petitioner vide his letter dated August 3, 1988. It was also mentioned in the reply that the matter was consideration for appointing the arbitrator in accordance with the arbitrator clause. So, in opposition to the petition the first contention raised by the learned counsel for the respondents is that as the petitioner had not moved the authorities within 28 days of rejection of the claims by respondent No. 2, thus, the petitioner has no right to get any arbitrator appointed. There is no merit in this contention. According to the arbitration clause, es enumerated above, the petitioner was first to put up his claims to respondent No. 2 and it was respondent No. 2 who was to give some award on the aforesaid claims acting as an arbitrator. It appears that no proceedings were held by respondent No. 2 to decide the claims of the petitioner and he had also not sent any notice of hearing to the petitioner although reference was made to him in March 1988 and a reminder was issued to him in April 1988.
It appears that no proceedings were held by respondent No. 2 to decide the claims of the petitioner and he had also not sent any notice of hearing to the petitioner although reference was made to him in March 1988 and a reminder was issued to him in April 1988. Sill there is nothing to show that respondent No. 2 acted as an arbitrator for deciding the disputes. He had sent the reply in August 1988 which shows that he had considered the claims of the petitioner and had rejected them. So, it cannot be said that any award had been given by respondent No. 2 so that the petitioner could take steps within 28 days of such an award. Even otherwise the question whether the petitioner has invoked the jurisdiction of the arbitrator within 28 days as mentioned in the arbitration clause is a question which would be decided by the arbitrator. In Bhim Sain v. Union of India1, it was provided in the arbitration clause that demand for arbitrator must be made within 90 days of final bill. The court held that such a question is to be decided by the arbitrator. I agree with the opinion expressed in this judgment on this aspect of the case. ( 5 ) THE learned counsel for the respondents has tried to argue that the arbitration clause excluded the excepted matters from the jurisdiction of the arbitrator. I have gone through the reply filed in this case by respondents 1 and 2 and I find that it is not at all pleaded as to what particular disputes which are contained in annexure a are covered by the term "excepted matter". So, it cannot be decided from the pleadings as they exist before this Court as to whether any of the disputes sought to be referred for arbitration are covered by "excepted matter" or not. ( 6 ) THE present petition was filed in Court on September 15, 1988. This petition can be termed as a demand on the respondents to appoint the arbitrator in accordance with the arbitration clause. A petition under Section 20 can be treated as a demand for appointment of arbitrator.
( 6 ) THE present petition was filed in Court on September 15, 1988. This petition can be termed as a demand on the respondents to appoint the arbitrator in accordance with the arbitration clause. A petition under Section 20 can be treated as a demand for appointment of arbitrator. (See Anand Kumar Jain v. Union of India1 Counsel for the petitioner has contended that as arbitrator has not been nominated depite the registered notice having been sent to respondent No. 1 in April 1988, the arbitrator now should be appointed by the Court. I think there is no merit in this contention. Under Section 20 of the Arbitration Act, the arbitrator has to be appointed in accordance with the arbitration clause. In the present case, as first a direction has to be given to the authorities indicated in the arbitration clause for appointing the arbitrator within the period laid down by the Court and on failure of such authority to appoint the arbitrator within the period prescribed by the Court, the Court can appoint an independent arbitrator. Similar procedure was followed by this Court in The Fort William Co. Ltd. v. Union of India and another3. It is not disputed before me that the claims contained in annexure a had arisen from the contract between the parties and thus, the arbitration clause can be invoked by the petitioner. In view of the above discussion, I hold that the petition is liable to be allowed. ( 7 ) I allow the petition and direct that the respondents should file the agreement containing the arbitration clause in Court and I also direct the Chief of Naval Staff to nominate the arbitrator within four months from today and on such arbitrator being nominated, the disputes contained in annexure a to the petition shall stand referred to such an arbitrator and in case no such arbitrator is nominated within the period prescribed the petitioner can move this court for appointment of an independent arbitrator to whom the said disputes will be referred.