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2003 DIGILAW 653 (PNJ)

Punjab State v. Sandhu Singh And Co.

2003-05-07

HEMANT GUPTA

body2003
Judgment Hemant Gupta, J. 1. The petitioner-State is aggrieved against he order whereby the learned trial court has dismissed the application of the petitioner for revocation of the authority of the arbitrator, respondent No. 2 herein in an application filed under Section 5 and 11 of the Arbitration Act. 2. An agreement for the construction of SYL Canal RD 22.000 to 26.000 was signed on 13.11.1984 between M/s Sandhu Singh and Company IE/12 Jhandewai Extension New Delhi (hereinafter referred to as the contractor) and State of Punjab (hereinafter referred as the Employer). Vide letter dated 30.12.1989/2.1.1990 the contractor sought decision regarding some extra item from the executive Engineer, Chandpur Construction Division SYL Canal Project, Punjab Chandigarh. Clause 60 of the general conditions and contract contemplates the situation where the contractor is to carry out extra items in execution of the contract. It is contemplated that if the contractor considers any work demanded of him to be outside the requirements of the contract, or considers any drawings, record or ruling of the Executive Engineer on any matter in connection with or arising out of the contract or the carrying out of work to be unacceptable, he shall promptly ask the Executive Engineer in writing, for written instructions or decision. Clause 60 of the agreement contemplates that the Executive Engineer shall give his written instructions or decision within a period of thirty days after being requested, or if the Contractor is dissatisfied with the instructions or decision of the Executive Engineer, the Contractor may within thirty days after receiving the instructions or decision appeal to the Superintending Engineer who shall afford an Opportunity to the Contractor to be heard and to offer evidence in support of his appeal and shall give a decision within 60 days. If still the contractor is dissatisfied, he can indicate his intention to refer the dispute to the arbitrator. However, Clause 60 does not contemplate any situation if the Superintending Engineer does not decide the claim of the contractor within 60 days. However, Clause 61 contains arbitration clause. It is contemplated therein that within 30 days of the receipt of the notice from the contractor of his intention to refer the dispute to arbitration, the Chief Engineer shall send to the contractor a list of three officers of the rank of Superintending Engineer. However, Clause 61 contains arbitration clause. It is contemplated therein that within 30 days of the receipt of the notice from the contractor of his intention to refer the dispute to arbitration, the Chief Engineer shall send to the contractor a list of three officers of the rank of Superintending Engineer. It is further contemplated that if the Superintending Engineer fails to send a list within thirty days, the contractors shall send a similar iist to the Chief Engineer within 15 days. For ready reference Clause 60 and 61 of the Contract Agreement are reproduced below: "60. Settlement of disputes: If the Contractor considers any work demanded of him to be outside the requirements of the contract; or considers any drawings, record or ruling of the Executive Engineer on any matter in connection with or arising out of the contract or the carrying out of work to be unacceptable, he shall promptly ask the Executive Engineer in writing, for written instructions or decision. Thereupon the Executive Engineer shall give his written instruction or decision within a period of thirty days of such request. Upon receipt of the written instructions or decision the Contractor shall promptly proceed without delay to comply with such instructions or decision.if the Executive Engineer fails to give his instructions or decision in writing within a period of thirty days after being requested, or if the Contractor is dissatisfied with the instructions or decision of the Executive Engineer, the Contractor may within thirty days after receiving the instructions or decision appeal to the Superintending Engineer who shall afford an opportunity to the Contractor to be heard and to offer evidence in support of his appeal. The officer shall give a decision within a period of sixty days after the Contractor has given the said evidence in support of his appeal. If the Contractor is dissatisfied with this decision, the Contractor within a period of thirty days from the receipt of the decision shall indicate his intention to refer the dispute to arbitration, failing which, the said decision shall be final and conclusive. 61. Arbitration. If the Contractor is dissatisfied with this decision, the Contractor within a period of thirty days from the receipt of the decision shall indicate his intention to refer the dispute to arbitration, failing which, the said decision shall be final and conclusive. 61. Arbitration. All the disputes or differences in respect of which the decision has not been final and conclusive shall be referred for arbitration to a sole arbitrator appointed as follows: Within thirty days of receipt of notice from the Contractor of his intention to refer the dispute to arbitration the Chief Engineer shall send to the Contractor a list of three officers of the rank of Superintending Engineer or higher, who have not been connected with the work under this contract. The Contractor shall within fifteen days of receipt of this list select and communicate to the Chief Engineer the name of the one officer from the list who shall then be appointed as the sole arbitrator. If the Contractor fails to communicate his selection of name, within the stipulated period, the Chief Engineer shall without delay select one officer from the list and appoint him as the sole arbitrator. If the Chief Engineer fails to send a list within thirty days, as stipulated, the Contractor shall send a similar list to the Chief Engineer within fifteen days. The Chief Engineer shall then select one officer from the list and appoint him as the sole arbitrator within fifteen days. If the Chief Engineer fails to do so the Contractor shall communicate to the Chief Engineer the name of one officer from the list, who shall then be the sole arbitrator. The arbitration shall be conducted in accordance with the provisions of the Indian Arbitration Act, 1940 or any statutory modification thereof. The arbitrator shall determine the amount of costs of arbitration to be awarded to either parties. Performance under the contract shall continue during the arbitration proceedings and payments due to the Contractor shall not be withheld unless they are the subject matter of the arbitration proceedings. All awards shall be in writing and in case of awards amounting to Rs. 1.00 lakh and above, such awards shall state the reasons for the amount awarded. Performance under the contract shall continue during the arbitration proceedings and payments due to the Contractor shall not be withheld unless they are the subject matter of the arbitration proceedings. All awards shall be in writing and in case of awards amounting to Rs. 1.00 lakh and above, such awards shall state the reasons for the amount awarded. Neither party is entitled to bring a claim to arbitration if the arbitrator has not been appointed before the expiration of thirty days after defect liability period- If the arbitrator so appointed is unable or unwilling to act or resigns his appointment or vacates his office due to any reasons whatsoever, another sole arbitrator shall be appointed as aforesaid. The Arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties fixing the date of first hearing. Arbitrator may, from time to time, with the consent of the parties, enhance the time for making and publishing the award. The arbitrator shall give a separate award in respect of each dispute or difference referred to him. The venue of arbitration shall be such place as may be fixed by the Arbitrator in his sole discretion. The fees, if any, of the Arbitrator shall, if required to be paid before the award is made and published, be paid half & half by each of the parties. The costs of the reference other than arbitration fees shall be settled at the discretion of the Arbitration. The award of the Arbitrator shall be final and binding on both the parties. This contract shall be governed by the Indian Laws for the time being in force. 3 In pursuance of the claim of extra items raised by the contractor before the Executive Engineer on 2.1.1990, the Executive Engineer failed to communicate any decision within 30 days. On 16.10.1990, the contractor made an appeal to the Superintending Engineer, Construction, Circle No. 2 under the provisions of Clause 60 of the Contract Agreement in respect of claim of extra items. On 26.12.1990, the contractor addressed a letter to the Chief Engineer, Construction, SYL Canal Project, Punjab pointing out that no decision has been taken by the Superintending Engineer within 60 days, therefore, the Contractor communicated to refer the dispute to the arbitration under the provisions of Contract Agreement. On 26.12.1990, the contractor addressed a letter to the Chief Engineer, Construction, SYL Canal Project, Punjab pointing out that no decision has been taken by the Superintending Engineer within 60 days, therefore, the Contractor communicated to refer the dispute to the arbitration under the provisions of Contract Agreement. The Contractor requested the Chief Engineer to proceed immediately with the matter under the provisions of Clauses 60 and 61 of the aforesaid agreement. There was no response from the Chef Engineer and on 8.2.1991, the contractor sent a list of 3 officers of the rank of Superintending Engineer or higher who were not connected with the work as a panel of arbitrators. The then Chief Engineer was requested that one officer out of the above mentioned 3 officers be selected and appointed as sole arbitrator. 4. The Chief Engineer vide his letter dated 5.4.1991 advised the contractors to seek decision of their appeal pending before the Superintending Engineer who was to give decision within a period of 60 days after the submission of evidence by the contractor. 5. The contractor completed the execution of the contract on 31.7.1990 and vide letter dated 16.8.1991 intimated to the department that the work of the construction of SYL Canal RD 22.000 to 26.000 stand completed. Defect liability period of 6 months expired on 31.1.1991. As per Clause 60 of the Contract Agreement reference to the arbitration can be made only within a period of 30 days of the expiry of defect liability period and thus, the contractor claimed that they sought reference in respect of extra items of the contract. 6. Learned counsel for the petitioner has vehemently argued that the claim for arbitration dated 26.12.1990 was not made by the duly authorised person. Only Sh. Bhagat Singh was holding General Power of Attorney who was competent to make request for arbitration but such request has been made for Sadhu Singh and Company a unit of kulhar Construction Limit by Gurnam Singh contractor and thus, it is not an authorised communication. It is also submitted that the Chief Engineer directed, the Superintending Engineer on 5.4.1991 to consider the claim of the contractor and thus appointment of arbitrator by the contractor is not legal and proper. 7. I have heard the learned counsel for the parties and with their assistance have gone through the records of the case carefully. 8. It is also submitted that the Chief Engineer directed, the Superintending Engineer on 5.4.1991 to consider the claim of the contractor and thus appointment of arbitrator by the contractor is not legal and proper. 7. I have heard the learned counsel for the parties and with their assistance have gone through the records of the case carefully. 8. The contractor has raised certain claim for extra items before the Executive Engineer on 2.1.1990 under the terms of the contract. The Executive Engineer was to give his decision within 30 days. The contractor if aggrieved could approach the Superintending Engineer within next 30 days and Superintending Engineer was to convey his decision within 60 days thereafter. Since the Executive Engineer has not communicated his decision within 30 days, the contractor has approached the Superintending Engineer on 16.10.1990. However, neither the Executive Engineer, Superintending Engineer or the Chief Engineer moved for the redressal of the grievance of the contractor till 5.4.1991 when the Chief Engineer directed the Superintending Engineer to decide the claim but before that date the contractor has already requested the Chief Engineer to appoint an arbitrator on 26.12.1990. On 8.2.1991, the contractor has given a panel of arbitrators. The action of the contractor is within the terms of Clause 60 and 61 of the Agreement whereas the employer has totally remained silent and has given complete go by to the time schedule mentioned in the agreement. Therefore, the appointment of arbitrator by the contractor is in terms of the agreement between the parties. The employer has not brought on record any other disability which may disentitled such arbitrator to act as an arbitrator. 9. It is only on 5.4.1991 i.e. much after contractor has appointed his arbitrator when the Chief Engineer directed the Superintending Engineer to examine the claim of the contractor. It is a case of total silence and non-action of the State. Therefore, there is no infraction of any of the. Clauses relating to settlement of dispute on behalf of the contractor. 10. The argument that Bhagat Singh is the General Power of Attorney competent to make request for arbitration is misconceived. The contract has been given to a company. The request for arbitration has been given on behalf of the such company. Clauses relating to settlement of dispute on behalf of the contractor. 10. The argument that Bhagat Singh is the General Power of Attorney competent to make request for arbitration is misconceived. The contract has been given to a company. The request for arbitration has been given on behalf of the such company. Still further the State has not endorsed any communication in response to the request for appointment of arbitrator dated 26.12.1990 that such intention is not emanating from the authorised representative. Thus, I do not find any illegality in the order passed by the learned trial court whereby the application of the State for revocation of the authority was dismissed. There is no material illegality or irregularity causing substantial injustice to the petitioner so as to exercise jurisdiction in favour of the petitioner. Dismissed.