K. C. CHHIBBER & COMPANY PVT. LTD. v. UNION OF INDIA
1996-09-13
ARUN MADAN
body1996
DigiLaw.ai
ORDER Arun Madan, J. - The revision petition has been preferred to this court against the impugned order dated 2-6-1995, passed by the learned A.D.J., Gangapur City in C.M.A. Arbitration Case No. 17/95, whereby the learned trial court dismissed the application filed by the petitioner-company under Sections 11 and 12 of the Arbitration Act vide its impugned order referred to above. This case has a chequered history in which 4 arbitrators were appointed and none of them proceeded to hear the matter except N.P. No. 2 (Shri S. S. Juneja) of the Ministry of Urban Development, New Delhi, who though entered upon reference on 8-8-1991 and he concluded the hearing on 31-1-1994 on which date he had also directed the parties, to produce the documents, if any, within 20 days and which were submitted by the petitioner-company within the stipulated time, but non-petitioner No. 1 sought further time to do so and filed the documents on 6-4-1994. Thereafter, the petitioner-company also filed its rejoinder within 15 days thereafter as directed by the learned arbitrator. It has further been contended by the learned counsel for the petitioner that the petitioner-company had also filed non judicial stamp papers as required by the learned arbitrator but, however, the award was not made by the learned arbitrator even after 10 months of the conclusion of the proceedings. 2. The contract, which is a subject-matter of dispute between the parties to the proceedings was on the basis of tenders, which were advertised by the C.P.W.D., New Delhi for construction of grain godowns of the capacity of 30,000 M.Ts. at Sawai Madhopur. The petitioner had applied for the tender, which was accepted by the respondent No. 1. The work was to commence w.e.f. 5-10-1984 and was required to be completed as per the agreement within a period of 12 months thereafter. But during the pendency of the contract, disputes arose between the parties and then N.P. No. 1 had alleged violation of some terms and conditions of the contract by the petitioner-company. Since no other arbitrator was appointed by the department, notwithstanding the service of notice by the petitioner-company, the petitioner was constrained to move the court for appointment of an arbitrator on 10-3-1986. The said application was accepted vide order dated 14-11-1981 passed by this court.
Since no other arbitrator was appointed by the department, notwithstanding the service of notice by the petitioner-company, the petitioner was constrained to move the court for appointment of an arbitrator on 10-3-1986. The said application was accepted vide order dated 14-11-1981 passed by this court. Notwithstanding the aforesaid directions of this court, the respondents committed inordinate delay of 5-6 years in appointing an arbitrator and it was only in the year 1991 that first arbitrator was appointed and during the intervening period 1986-91 at least 4 arbitrators were appointed by the department, who refused to act after their appointment on one pretext or the other as a result of which the petitioner was subjected to irreparable loss and injury. Even the last arbitrator (Shri S. S. Juneja, N.P. No. 2), who was appointed to act as an arbitrator by the department on 25-7-1991 had committed inordinate delay of over two and a half years in completing the proceedings and did not give his award even after the expiry of 7 months of completion of the proceedings. 3. Under these aforesaid circumstances, the petitioner-company moved an application under Sections 11 and 12 of the Arbitration Act, 1940 (hereinafter referred to as the Act) on 16-11-1994 in the court of learned District Judge, Sawai Madhopur praying therein that N.P. No. 2 be removed as an arbitrator and in his place any other independent person though retired from the same department and even higher in rank than the arbitrator (N.P. No. 2) be appointed, Since Shri S. S. Juneja had failed to discharged all reasonable dispatch in the proceedings and had further failed to discharge his statutory duties as an arbitrator by neither giving nor publishing the award within the statutory period of 4 months as stipulated under the Act and had thus mis-conducted himself and consequently the proceedings before him stood vitiated. 4. The matter was subsequently heard by the learned Additional District Judge, Gangapur City at the request of the non-petitioner No. 1. 5. In this revision petitioner, it has been contended inter alia that N.P. No. 2 was appointed on 25-7-1991 and he entered upon reference w.e.f. 8-8-1991.
4. The matter was subsequently heard by the learned Additional District Judge, Gangapur City at the request of the non-petitioner No. 1. 5. In this revision petitioner, it has been contended inter alia that N.P. No. 2 was appointed on 25-7-1991 and he entered upon reference w.e.f. 8-8-1991. Though he proceeded with the reference and after hearing the arguments had concluded the proceedings on 31-1-1994 by giving option to the parties to file the documents, if any, within a period of 20 days and though the applicant-company had complied with the directions of the learned arbitrator on 18-2-1994 itself, however, N.P. No. 1 sought further time to file the documents and did not do so. 6. In April 1994, and thereafter, the petitioner-company filed its rejoinder within the stipulated period of 15 days including submission of non-judicial stamp papers on 28-4-1994 as directed but the learned arbitrator did not give his award till date. It has further been contended that it was the statutory duty of the learned arbitrator to have made and published the award within the requisite period of 4 months as required under the Act and he took two and a half years to conclude the arbitration proceedings and he did not make any award even after the expiry of 10 months of the conclusion of the proceedings and deliberately delayed the same and thus committed misconduct as an arbitrator. That upon notice to N.P. No. 2, the erstwhile arbitrator filed his reply to the petitioner's application before the learned trial court and controverting the stand of the petitioner by contending that the award could not be given or pronounced within the statutory period for reasons beyond his control. He had further contended though the award was complete and what was required was only the publication of the said award but the same could not be done since the petitioner had moved to this court by way of the aforesaid application and the learned trial court, after hearing the parties dismissed the petitioner's application vide its impugned order dated 2-6-1995. 7. The learned trial court after hearing the learned counsel for the parties recorded the findings as per the rules, the arbitrator should have made and published the award within the statutory period of 4 months but the same was not done by the learned arbitrator within the statutory period.
7. The learned trial court after hearing the learned counsel for the parties recorded the findings as per the rules, the arbitrator should have made and published the award within the statutory period of 4 months but the same was not done by the learned arbitrator within the statutory period. Under these circumstances, the time could only be extended by the consent of parties if the arbitrator had applied for extension of time before the expiry of statutory period of 4 months, which admittedly he had not done at the same time notwithstanding the expiry of statutory period, the trial court recorded a finding that since 3 arbitrators had been appointed in the past, who had refused to act on one pretext or the other and since the delay was on account of the petitioner, the 4th and the last arbitrator (N.P. No. 2) should not be removed merely for the reason of delay on his part for neither making nor publishing the award within the statutory period as required under the Act since there is further likelihood of delay being caused if a new arbitrator is appointed by removing the N.P. No. 2 as he had completed the proceedings after hearing the parties though not given the award. 8. I have heard learned counsel for the parties and also perused the impugned the impugned order as well as the summoned record. 9. In my considered opinion, the trial Court has committed grave illegality in not appreciating the legal position that before the expiry of the statutory period of 4 months, which is the time limit fixed under the schedule of the Act for making and publishing of an award by an arbitrator the time cannot be extended without obtaining the consent of the parties.
The trial court has further failed to consider that where an arbitrator is appointed through intervention of the court and where the arbitrator has entered upon reference pursuant to the directions of this court, appointing the said arbitrator, and in case he does not make or publish the award within the statutory period as envisaged under the Act, the time cannot be unilaterally extended by the Arbitrator and it is enjoined upon the said arbitrator to move the concerned court for extension of time, which can only be granted by the Court in the event of arbitrator giving his reasonable explanation for not having been able to give the award within the statutory period. In this case admittedly the arbitrator neither moved the Court for extension of time before the expiry of the statutory period of 4 months nor he had sought any such extension before the expiry of the aforesaid period in absence at which the trial Court was not competent to direct the arbitrator to proceed within the making of the award on the ground that since he had completed the proceedings and the only direction which could be given to him was for making and publishing the award, the same could not be withheld. 10. I have been informed by the learned counsel for the respondents that Sh. I.S.S. Junena (N.P. No. 2) who had earlier agreed to function as an arbitrator in the matter has since been promoted as Chief Engineer and has consequently become functus-officio in the matter of arbitration between the parties i.e., M/s. K. C. Chhibber and Company Private Limited v. UOI through the Executive Engineer, Faridabad, Central Division No. 2 C.P.W.D. pertaining to the work of construction of 30,000 Mts. grain godowns at Sawai Madhopur (Rajasthan). 11. I directed the learned counsel for the parties to suggest another suitable name, which may be agreeable to both the parties. During the course of hearing, two names of officials have been suggested by the learned counsel for the respondents one is Shri D. P. Goel, Chief Engineer at Jaipur in C.P.W.D. and another, Shri Mahesh Chandra, Chief Engineer C.P.W.D. at Sewa Bhawan, New Delhi.
During the course of hearing, two names of officials have been suggested by the learned counsel for the respondents one is Shri D. P. Goel, Chief Engineer at Jaipur in C.P.W.D. and another, Shri Mahesh Chandra, Chief Engineer C.P.W.D. at Sewa Bhawan, New Delhi. Since the names where not agreeable, I suggested the learned counsel for the parties that whether it is possible to appoint any retired officials of the concerned department and on the query being raised by the Court, learned counsel for the petitioner has suggested the names of two retired officials of the concerned department i.e., (1) Shri C. Ramarao, who is a retired Director General (Works) of C.P.W.D. residing at B-179, Lok Vihar Pitampura, New Delhi-34(2) Shri K. D. Bali retired Chief Engineer C.P.W.D. residing at S-147, Panchseel Park, New Delhi. 12. I accordingly direct to Mr. C. Ramarao, retired, Director General (Works) of C.P.W.D. residing at B-179. Lok Vihar Pitampura, New Delhi-34 to act as an arbitrator in the matter as mentioned above. In case Mr. Ramarao is not willing to accept arbitration then Mr. K. D. Bali, retired Chief Engineer C.P.W.D, residing at Section 147. Panchseel Park. New Delhi will act as an arbitrator. 13. I am informed by the learned counsel for the parties that since the pleadings in the matter are complete arbitrator shall enter upon reference by resuming the proceedings front the stage, it was left by the erstwhile arbitrator (N.P. No. 2). The arbitrator is accordingly directed to enter upon reference by resuming the arbitration proceedings in the above referred matter from the state, it was left by the erstwhile arbitrator (N.P. No. 2) and shall after giving due notice and sufficient opportunity of hearing to the parties shall proceed with the matter expeditiously by making and publishing the award within the stipulated period of 4 months from the date he enters upon reference in accordance with law. 14. Shri S. S. Juneja the erstwhile arbitrator is director to send the concerned record to Mr. C. Ramarao on Shri K. D. Bali as the case may be immediately on receipt of certified copy of this order. 15. The revision petition is accordingly allowed with no order as to costs. The impugned order dated 2-6-1995 passed by learned A.D.J. Gangapur City in C.M.A. (Arbitrator Act) No. 17/95 is quashed and set aside. 16.
C. Ramarao on Shri K. D. Bali as the case may be immediately on receipt of certified copy of this order. 15. The revision petition is accordingly allowed with no order as to costs. The impugned order dated 2-6-1995 passed by learned A.D.J. Gangapur City in C.M.A. (Arbitrator Act) No. 17/95 is quashed and set aside. 16. The fees of the arbitrator is fixed at Rs. 25,000/- to be shared and deposited by both the parties i.e., 50% each with the arbitrator. 17. The summoned record be sent back to the concerned trial court immediately. Petition allowed.