TALUPULA ENGINEERING COMPANY, NEW DELHI v. UNION OF INDIA
2007-11-23
H.L.GOKHALE
body2007
DigiLaw.ai
JUDGMENT Honble H.L. Gokhale,CJ.—Heard Mr. U.N. Sharma in support of this petition. Mr. S.P. Singh appears for the respondents. 2. The petitioners are contractors who had entered into an agreement with the respondents-Railways on 21.2.2005 for constructing a Bridge in Andhra Pradesh. It is their case that a cyclone took place between September to December, 2005, because of which, the work could not be proceeded. They invoked the (Force Majeure) Clause on 7.11.2005 to point out their difficulties. On 19.7.2006, they terminated the contract. The actual quotation of the claim was done on 25.7.2006 as amounting to Rs. 3.5 crores. 3. The present Arbitration Application under Section 11 (6) of the Arbitration and Conciliation Act, 1996 has been filed on 17.8.2006. It is submitted that inasmuch as the demand for appointment of the Arbitrator was made and the Arbitrator was not appointed within 30 days, this Court should appoint the Arbitrator as sought by the petitioners. 4. On behalf of the respondents, it is contended that under the contract between the parties, Railways had a time of 120 days after receiving the demand to take the necessary decision. The relevant part of the Arbitration Clause between the parties reads as follows : "(b) (i) DEMAND FOR ARBITRATION In the event of any dispute or difference between the parties hereto as to the construction or operation of this contract, or the respective rights and liabilities of the parties or any matter in question, dispute or difference on any account or as to the withholding by the Railway Electrification of any certificate to which the contractor may claim to be entitled to, or if the Railway Electrification fails to make a decision within 120 days, then and in any such case, but except in any of the excepted matters referred to in clause 1.2.54(a) above of these conditions, the contractor, after 120 days but within 180 days of his presenting his final claim on disputed matters, shall demand in writing that the dispute or difference be referred to arbitration." 5. Mr. Singh, learned Counsel for the respondents points out that Railways had a time of 120 days within which they had to take the decision. He also relies upon clause (d) (ii) which gives the authority to the General Manager to submit three names. In the counter-affidavit filed by the Railways, there is a letter dated 20.9.2006 appointing three Arbitrators. 6. Mr.
He also relies upon clause (d) (ii) which gives the authority to the General Manager to submit three names. In the counter-affidavit filed by the Railways, there is a letter dated 20.9.2006 appointing three Arbitrators. 6. Mr. Sharma, learned Counsel appearing for the petitioners relies upon a judgment of the Apex Court in the case of Datar Switchgears Ltd. v. Tata Finance Ltd. and another, (2000) 8 SCC 151 and particularly para 19. He submits that since the appointment is not made within 30 days of the demand, the right to appoint an Arbitrator under Section 11 (6) is forfeited. Mr. Sharma further submits that under the relevant Clause, the Railways had to give an option by forwarding three names and then one of them is to be selected by the contractors. 7. Mr. Singh has no objection if out of three names which the Railways had suggested, one is selected by the contractor as his nominee. The rest of the two will be appointed by the General Manager including one from the Accounts Department. 8. The submission of Mr. Sharma, based on the judgment in Datar Switchgears case (supra), will not apply in the present case, inasmuch the Railways had supplied the three names within 120 days though erroneously calling them as the Arbitrators. 9. In the circumstances, the application is dismissed as being premature. It will be open to the petitioners to select one name out of three names which the Railways had suggested and the General Manager is to proceed to appoint other two, including one from the Accounts Department. ————