Allied Construction Company v. National Thermal Power Corporation Ltd.
1991-11-20
R.S.KEJRIWAL
body1991
DigiLaw.ai
JUDGMENT 1. - This revision has been directed against the order dated 22.3.1991, passed by District Judge, Jaipur City, Jaipur, in Arbitration Case No. 113/90, deciding the application of the petitioner under Section 8 of the Indian Arbitration Act (for short the Act). 2. The brief relevant facts of the case are that petitioner's tender for construction of office buildings of the non-petitioner was accepted by the non- petitioner. An agreement was executed by the parties. Para No. 56 of the agreement reads as below: "Except where otherwise provided for in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instruction herein before mentioned and as to the quality of workmanship or materials used on the work or as to any other questions, claim, right matter or thing whatsoever in any way arising out of or relating to the contract, designs, drawings specification estimates instruction orders or these conditions or otherwise commencing the works or the execution or the failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the sole arbitration of the General Manager of National Thermal Power Corporation and if "The General Manager is unable or unwilling to act, to the sole arbitration of some other person appointed by the Chairman and Managing Director National Thermal Power Corporation and willing to act as such arbitrator." 3. Disputes arose between the parties and consequently, on 22.9.1990, the petitioner served a notice to the General Manager of the non-petitioner and requested him to enter upon reference himself and if for any reason, he was unable or unwilling to act as an arbitrator, then some other person willing to act as arbitrator be appointed as an arbitrator. When no reply was received by the petitioner, the petitioner submitted an application before the District Judge, Jaipur City, Jaipur on 6.12.1990, and prayed that the non-petitioner be directed to produce the agreement before the Court and an arbitrator be appointed. The non-petitioner filed a reply to the said application, in which the non-petitioner admitted the agreement and also the receipt of notice dated 22.9.1990. In para No. 13 of the reply, the non-petitioner stated that on receipt of the notice dated 22.9.1990, the said non-petitioner on 8.10.1990, directed Shri Kukeraja, Senior Manager of the non-petitioner to do the necessary proceedings.
The non-petitioner filed a reply to the said application, in which the non-petitioner admitted the agreement and also the receipt of notice dated 22.9.1990. In para No. 13 of the reply, the non-petitioner stated that on receipt of the notice dated 22.9.1990, the said non-petitioner on 8.10.1990, directed Shri Kukeraja, Senior Manager of the non-petitioner to do the necessary proceedings. Later on, on 8.10.1990, Shri Kukreja sent a notice to the petitioner which was acknowledged by the petitioner vide his letter dated 23.10.1990. It was prayed in the reply that the application of the petitioner be accepted and the General Manager of the non- petitioner be appointed as Arbitrator. The learned District Judge, Jaipur City, Jaipur, after considering the material on record, vide his order dated 22.3.1990, allowed the application and appointed General Manager of the non-petitioner as arbitrator to decide the dispute between the parties. This order has been challenged in this revision by the petitioner. 4. I have heard learned counsel for the parties and perused the record. Mr. Maloo, counsel for the petitioner argued that the petitioner vide his letter dated 22.9.1990, served a notice on the non-petitioner for appointment of an arbitrator. The non-petitioner even after receipt of the said notice did not appoint any arbitrator and as such the Court should have appointed independent arbitrator. He further argued that the approach of the learned District Judge in deciding the application of the petitioner is erroneous. The learned District Judge while deciding the application observed that the non-petitioner never denied to act as a arbitrator and as both the parties had agreed to appoint the General Manager of the non-petitioner or any other person appointed by him as an arbitrator and as such the General Manager of the non-petitioner should be appointed as an arbitrator. He argued that when the non-petitioner failed to appoint arbitrator within 15 days of the receipt of notice dated 22.9.1990, the non-petitioner waived its right of appointment of arbitrator and under these circumstances, the Court should have appointed impartial arbitrator. He further argued that the case of the non-petitioner that on 4.1.1990, Shri Kukeraja was appointed as an arbitrator, has not been established and as such the Court should have allowed his application and should have appointed independent arbitrator. Mr. Maloo lastly argued that the lower Court has appointed the General Manager of the non- petitioner as sole arbitrator.
He further argued that the case of the non-petitioner that on 4.1.1990, Shri Kukeraja was appointed as an arbitrator, has not been established and as such the Court should have allowed his application and should have appointed independent arbitrator. Mr. Maloo lastly argued that the lower Court has appointed the General Manager of the non- petitioner as sole arbitrator. The General Manager cannot be impartial. He drew my attention to the letter dated 7.1.1991 written by the Manager of the non-petitioner, by which the petitioner was asked to withdraw the case from the Court and thereafter contact for taking further action regarding arbitration /discussions.In support of his arguments, counsel for the petitioners placed reliance on Niranjan Swain v. State of Orissa and others, AIR 1980 ORRISA 142, Banarsi Dass Mittal v. Housing Board Haryana and others, 1988 (Eight) Arb. L.R. , Union of India v. Amarnath Agarwal Const. Pvt. Ltd., 1988(2) Arb. L.R. , Nalini Ranjan Guha v. Union of India, AIR 1954 Calcutta 462 and Union of India v. D.P. Singh, AIR 1961 PATNA 228 . 5. On the other hand Mr. G.G. Sharma, counsel for the non- petitioner argued that the lower court has not committed any jurisdictional error and as such the revision is not maintainable. He further argued that on receipt of the notice dated 22.9.90, the General Manager of the non-petitioner on 4.10.1990, appointed Mr. Kukeraja as sole arbitrator. Lateron Mr. Kukeraja wrote a letter dated 8.10.1990 to the petitioner. He argued that under these circumstances, the application of the petitioner under Section 8 of the Act for appointment of arbitrator was not maintainable. He prayed that the revision be dismissed. 6. After hearing counsel for both the parties, I am of the view that the non-petitioner did not reply the notice/ letter dated 22.9.1990 of the petitioner and never informed the petitioner regarding appointment of an arbitrator. On the letter/notice dated 22.9.1990, sent by the petitioner for appointment of an arbitrator, the General Manager of the non-petitioner mentioned the following words : "Shri Kukeraja please note and discuss for further action." 7. There is no note anywhere that Mr. Kukeraja was appointed as sole arbitrator nor the petitioner was informed at any time that Mr. Kukeraja was appointed as an arbitrator. Further from the letter dated 8.10.91, written by Mr.
There is no note anywhere that Mr. Kukeraja was appointed as sole arbitrator nor the petitioner was informed at any time that Mr. Kukeraja was appointed as an arbitrator. Further from the letter dated 8.10.91, written by Mr. Kukeraja, it does not appear that he was appointed as an arbitrator by the General Manager or the Chairman of the non-petitioner. Under these circumstances, by not appointing any arbitrator within 15 days from receipt of notice/letter dated 22.9.1990, the non-petitioner waived its right of appointment of arbitrator and the Court was required to appoint an arbitrator. The lower court vide impugned order appointed the General Manager of the non-petitioner as sole arbitrator but the approach in appointing the General Manager of the non-petitioner is erroneous and perverse. The lower court in its order observed that the non-petitioner did not refuse to act as an arbitrator and further that there was no agreement between the parties to appoint any other person beyond the agreement. In my view this approach of the lower court in appointing the arbitrator under Section 8 (2) of the Act is perverse. When a duty is cast upon a court to appoint an arbitrator, the Court should see that an impartial and independent arbitrator should be appointed and not a person interested in any of the parties. The lower court did not consider this aspect of the case and appointed General Manager of the non-petitioner, simply on the ground that there was no agreement between the parties to appoint any other arbitrator. In my view the order passed by the lower court is perverse and deserves to be set aside and in case it is allowed to stand, it would occasion failure of justice. 8. Consequently, I allow the revision set aside the order passed by the lower court appointing the General Manager of the non- petitioner as sole-arbitrator and direct the lower court to appoint any impartial and independent arbitrator to decide the dispute between the parties. 9. Both the parties shall bear their own costs.Revision allowed. *******