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1993 DIGILAW 180 (HP)

COMPETENT CONSTRUCTION COMPANY v. STATE OF HIMACHAL PRADESH

1993-12-23

D.P.SOOD

body1993
ORDER (ORAL) D. P. Sood, J. - Petitioner was awarded the work of construction of Himachal Bhawan, Sikandra Road, New Delhi, by respondent No. 1 on 22.8.1978. Agreement including arbitration clause was executed in relation thereto. The work was to be completed within 24 months i.e., on or before 5.9.1980. The work could not be completed for one reason or the other. Petitioner allege non-completion of the work due to hindrance and hurdles created by respondent No. 1. Any how, the time was extended upto 14.2.1982 for the completion thereof. Within the extended period, the building work was completed and it was handed over to respondent No. 4. 2. After submission of the final bill in relation to the above said work done by the petitioner, some disputes arose. It is alleged that though part payments in respect of the bills have been made after unilaterally deducting/ withholding/disallowing huge amount, the balance amount is not being paid. Thus the respondents having failed to make the payment to the petitioner, the latter had been compelled to invoke clause 25 of the agreement seeking a reference of the dispute to an Arbitrator. Clause 25 envisage that if any dispute or claim arises out of the contract such dispute shall be referred to the Chief Engineer for arbitration by a person appointed by him. Petitioner allege that the dispute and claim arose between the parties inter alia, regarding the interpretation of clauses 10C, 43, 12, 5 and other clauses of he agreement. So he requested the Chief Engineer vide his letter dated 26.2.1984 to appoint an arbitrator having legal background and good knowledge of law for the reasons that the dispute involved substantial and complicated questions of law. Petitioner allege that no such efforts has been made till date. According to him, the second respondent (Engineer-in-Chief) mechanically and unilaterally appointed Shri S. C. Kohli and thereafter P. C. Bisht, both Superintending Engineers, one after the other, but each one of them expressed his inability to proceed with the arbitration and conclude the case. Shri P. C. Bisht unilaterally appointed as an Arbitrator is alleged to have entered upon the reference w.e.f. 2.4.1985 but later declined to do so. Resultantly, the petitioner filed the instant petition under Sections 5, 8, 9, 12 & 41 of the Arbitration Act in the High Court of Delhi in exercise of its Civil Original Jurisdiction in August 1985. Shri P. C. Bisht unilaterally appointed as an Arbitrator is alleged to have entered upon the reference w.e.f. 2.4.1985 but later declined to do so. Resultantly, the petitioner filed the instant petition under Sections 5, 8, 9, 12 & 41 of the Arbitration Act in the High Court of Delhi in exercise of its Civil Original Jurisdiction in August 1985. The said petition was registered as Civil Suit No. 1534-A of 1985. Later vide order passed on July 6, 1988, finding that the court had no jurisdiction, the petition was returned for it presentation before the court of Id. District Judge, Shimla. It appears that the papers pertaining thereto were either not returned or record to the case was not sent to the learned District Judge, Shimla, so the petitioner filed another petition seeking a direction to its Registry to send the record of the original suit referred to above to appropriate authority as is envisaged under Order 7 Rule 10 of the Code of Civil Procedure. A single Bench of High Court of Delhi vide its order dated December 17, 1991 ordered the sending of the record to the appropriate authority, i.e., the learned District Judge, Shimla and also directed the parties to appear in that court on 15.2.1992. 3. The parties to the instant lis put in appearance in the court of the Id. District Judge who also found that the valuation of the subject matter was beyond his pecuniary jurisdiction and consequently vide his order dated March 2, 1992 returned the petition to the petitioner for its presentation before a competent court of civil jurisdiction. Ultimately, this petition was filed before this court on March 31, 1992 and it is in this manner that this court is seized of the dispute in between the parties. 4. Respondents have adopted the reply already filed in the High Court of Delhi. The prayer seeking the appointment of an Arbitrator having legal knowledge in relation to the peculiar facts and circumstances of this case has been vehemently contested. According to the respondents, petition is neither bona fide nor in accordance with the statutory provisions of the Arbitration Act, Respondents contend that on the dispute raised by the petitioner, arbitrators have been appointed by the competent authority in accordance with clause 25 of the agreement. According to the respondents, petition is neither bona fide nor in accordance with the statutory provisions of the Arbitration Act, Respondents contend that on the dispute raised by the petitioner, arbitrators have been appointed by the competent authority in accordance with clause 25 of the agreement. According to the respondents the Arbitrator earlier appointed was a Senior Superintending Engineer having vast experience of technical and all other related matters in addition to having handled a number of arbitration matters, had already been appointed. Secondly, the dispute also falls under Clause 12-A pertaining to the analysis of rates are required to be derived and decide by an Engineer. Similarly, the claims falling under Clause-10C are required to be worked out and decided for the said purpose and particularly the adjudication of the claim, it is contended that the prayer for appointment of a legal expert is not tenable. 5. On the return of petition by the Id. District Judge, Shimla, for its presentation before the court of Civil Jurisdiction, OMP No. 173 of 1992 was moved in this court under Section 151 C.P.C. praying that the petition be registered and matter be proceeded on merits. In reply there to, it has been pointed out that after the appointment of the aforesaid two Arbitrators and they having declined to proceed with the disputes, the Engineer-in-Chief (second respondent) again in exercise of powers under Clause-25 of the agreement, appointed Shri I. C. Kapoor, Superintending Engineer, as an Arbitrator and the matter/dispute between the parties is still pending before him. However, on account of the stay granted by the High Court of Delhi vide its order dated 24.6.1986, the Arbitrator so appointed (Shri I. C. Kapoor) has not been able to proceed with it. 6. I have heard the learned counsel for the parties at length and I have also carefully gone through the record. Shri Bhupender Gupta, learned counsel for the petitioner has vehemently urged that though the Arbitrators so appointed repeatedly one after the other by respondent No. 2, has been appointed in accordance with clause 25 of the agreement, yet each one of them lacked legal background for proceedings with the case and deciding it by interpreting substantial and legal questions of law involved in the matter in dispute, relating to clauses 10C, 12-A, 43 and 5 of the agreement. 7. 7. In order to appreciate the submissions so made by the learned counsel for the petitioner, it is absolutely necessary to nature the arbitration clause 25 of the agreement which is as under : "Clause 25 - Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions hereinbefore mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever, in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instruction, orders or these conditions or otherwise concerning the works or the execution or 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 person appointed by the Chief Engineer, Himachal Pradesh Public Works Department. It will be no objection to any such appointment that the arbitrator so appointed is a Government servant, that he had to deal with the matters to which the contract relates and that in the course of his duties as Government servants he had expressed views on all or any of the matters in dispute of difference. The arbitrator unto whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason, the Chief Engineer, Himachal Pradesh Public Works Department at the time of such transfer, vacation of office or inability to act, shall appoint another person to act as arbitrator in accordance with the terms of the contract. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is also a term of this contract that no person other than a person appointed by Chief Engineer, Himachal Pradesh Public Works Department should act as arbitrator and, if for any reason, that is not possible, the matter is not to be referred to arbitration at all. Subject as aforesaid the provisions of the Arbitration Act, 1940 or any statutory modification or re-enactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceeding under this clause." 8. Subject as aforesaid the provisions of the Arbitration Act, 1940 or any statutory modification or re-enactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceeding under this clause." 8. A careful perusal of the above said clause reveal that the agreement does provide for a situation when the arbitrator appointed by the Chief Engineer under the agreement has declined and/or refused or expressed his unwillingness as to act as such, he (Chief Engineer) has been empowered to appoint another arbitrator. This intention of the parties is specifically incorporated and is exhibited by this clause. Not only this, the successor arbitrator is then required to proceed with the reference from the stage at which it was left by his predecessor. This clause further lays down that no person other than a person appointed by the Chief Engineer H.P. P.W.D., should act as an Arbitrator and if for any reason, that is not possible, the matter is not to be referred to the arbitration at all. 9. Obviously, the object under the arbitration proceeding is to provide speedy remedy to the aggrieved party by a person of their choice. The above said clause also does not provide that the Arbitrator so appointed should make a speaking award. No specific qualifications have been laid down by this clause for the appointment of an arbitrator nor any other person except appointed by the Chief Engineer can be empowered to proceed with the reference. It is also the underlying intendment of the arbitration clause that in case the arbitrator appointed by the Chief Engineer, refuses to act and further appointment if for any reason, is not possible, the matter is not to be referred to the arbitration at all. In other words, the only grounds under which authority of an arbitrator appointed by the Chief Engineer can be revoked and directions to appointing authority to appoint his successor afresh are that he is likely to show bias or there is sufficient reason to suspect that he (Arbitrator) will act unfairly or that he is guilty of continued unreasonable conduct or that he has pre-judged the matter likely to go before him for adjudication. Only on these grounds, an application can be moved before the court for revocation of the authority of the Arbitrator under Section 5 of the Arbitration Act. 10. Only on these grounds, an application can be moved before the court for revocation of the authority of the Arbitrator under Section 5 of the Arbitration Act. 10. In the instant case, the only ground seeking the revocation of the authority of Shri I. C. Kapoor an Arbitrator already appointed by the appointing authority, is that he has no legal background to correctly interpret the clause of the agreement and thus he is unable to adjudicate upon the lis pending in between the parties. This submission is meritless in view of specific agreement in between the parties to the instant lis. 11. In the light of the observations made above, this is no ground for revoking the authority of the newly appointed Arbitrator. Further fact that for want of legal background of the Arbitrator so appointed (Shri I. C. Kapoor) the petitioner cannot repose the confidence in him and it would be inequitable to compel the petitioner to submit himself to their arbitration also, cannot be accepted in view of the arbitration clause wherein the parties have chosen to refer their dispute to a specific forum i.e. the Arbitration to be appointed by the Chief Engineer. In that view of the matter the submission made by the learned counsel for the petitioner is meritless and the application is liable to be dismissed. 12. In view of the above the petition is dismissed. The interim stay order passed on 24.6.1986 restraining Shri I. C. Kapoor to proceed with the reference is vacated. Parties are directed to put up their claims/ counter claims before him within six weeks. They are also directed to appear before, him on February 8, 1994. The petition stands disposed of in terms of the above. Application dismissed.