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Himachal Pradesh High Court · body

2007 DIGILAW 426 (HP)

Ayush Constructions Pvt. Ltd. v. National Hydroelectric Power Corporation Ltd.

2007-10-09

V.K.GUPTA

body2007
JUDGMENT V.K. Gupta, C.J. 1. This Petition has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (1996 Act : for short) whereby the petitioner seeks the appointment of an Arbitrator in terms of the arbitration agreement between the parties. The contention of the petitioner in this Petition is that it had entered into an agreement with the respondents with respect to the construction of permanent B Type quarters, 24 in number including the provision of internal water supply and sanitary works etc. 2. The tender for the said work was opened on 10th Mach, 2003 and the price bid of the petitioner was opened on 15th May, 2003. According to the petitioner, the work stood completed in all respects on 3rd May, 2005 and intimation to this effect was also given to the respondents vide petitioner's letter dated 20th May, 2005. The completion Certificate was thereafter issued by the officers concerned on 5th November, 2005. 3. In the reply filed by the respondents, a number of preliminary submissions have been made. The execution as well as the existence of the agreement between the petitioner and the respondents has not been denied. The respondents have also not denied about the execution of the work by the petitioner even though they have denied that the work was completed on 3rd May, 2005. According to the respondents, the work was completed on 31st December, 2005. Various related averments with respect to the claims of the petitioner have been denied by the respondents but what is noteworthy is that the respondents have admitted the factum of the execution as well as the existence of the agreement between the parties, including the Arbitration Clause contained therein. They have also admitted about the execution of the work by the petitioner. 4. They have also admitted about the execution of the work by the petitioner. 4. The arbitration agreement between the parties (contained in Clause 55 of the agreement) reads thus: 55.1 Except as otherwise provided, in Clause 53 herein before, all questions, dispute or difference in respect in which the decision has not been final and conclusive arising between the contractor and the Corporation, in relation to or in connection with the contract shall be referred for arbitration in the manner provided as under: (i) Either of the parties may give to the other notice in writing of the existence of such question, dispute or difference; (ii) Within thirty (30) days of receipt of such notice from either party, the Chief Engineer/In-charge of the project at the time of such dispute shall send to the contractor a panel of three persons and thereafter the contractor within fifteen (15) days of receipt of such panel communicate to the Chief Engineer/In-charge of the project the name of one of the persons from such panel and such a person shall then be appointed sole arbitrator by the Chief Engineer/In-charge of the Project. (iii) Provided that if the contractor fails to communicate the selection of a name out of the panel so forwarded to him by the Chief Engineer/In-charge of the project shall without delay select one person from the aforesaid panel and appoint him as the Sole Arbitrator. 5. On 2nd April, 2007, the petitioner sent a notice to respondent No. 1 detailing therein its claims based upon the facts mentioned in the said notice. In terms of the aforesaid arbitration Clause, the petitioner requested respondent No. 1 to send to it a panel of three persons so as to enable the petitioner to select one out of the said panel as an Arbitrator. In terms of the aforesaid arbitration agreement, the petitioner gave 30 days' time to respondent No. 1 to do the needful. It was clearly mentioned in the notice that if the needful was not done within the said period, the petitioner would approach this Court for appointment of an Arbitrator. 6. The relevant extract of the notice, being its operative part containing the aforesaid request is quoted hereinbelow. It was clearly mentioned in the notice that if the needful was not done within the said period, the petitioner would approach this Court for appointment of an Arbitrator. 6. The relevant extract of the notice, being its operative part containing the aforesaid request is quoted hereinbelow. It reads thus: On behalf of my client I am, therefore, to request you to send my client a panel of three persons to enable my client to select an arbitrator from the said panel. This may be done within a period of 30 days of the receipt hereof failing which my client shall be compelled to request Hon'ble the Chief Justice of the High Court of Himachal Pradesh to nominate an independent arbitrator to adjudicate upon the disputes detailed above. 7. The petition was filed in this Court on 11th June, 2007 and was taken up for consideration for the first time on 15th June, 2007. Reply was filed by the respondents on 10th August, 2007. Along with the reply the respondents have annexed R-4, which is a copy of communication No. NHPC/PP-II/T/Ship-N/Pkg-T-48/07/621-22 dated 13th July, 2007 whereby they have admitted the receipt of the aforesaid notice dated 2nd April, 2007. In this communication they have taken various pleas and raised various defences rebutting and refuting the allegations of the petitioner and have also disputed their liability to pay any amount. 8. They have also disputed their liability to appoint the Arbitrator in terms of the arbitration agreement. 9. It is noteworthy to mention that the aforesaid communication is dated 13th July, 2007. This was sent after the filing of the petition in the Court. This was actually sent after the respondents had acquired the knowledge about the pendency of this case in this Court because as per the record shown to me by Mr. K.D. Shreedhar, learned Counsel appearing for the respondents, they had acquired the knowledge on 12th July, 2007. 10. Mr. Shreedhar's main contention in opposition to the petitioner' request for appointment of an Arbitrator is that the request is premature and that the petitioner has not performed the obligations which it was required to perform based upon the covenants in the agreement. 10. Mr. Shreedhar's main contention in opposition to the petitioner' request for appointment of an Arbitrator is that the request is premature and that the petitioner has not performed the obligations which it was required to perform based upon the covenants in the agreement. The specific plea is that the petitioner has not so far submitted the final bill and, therefore, the request for appointment of Arbitrator being pre-mature is untenable and the same should accordingly be declined by this Court. I do not agree with the aforesaid contention of Mr. Shreedhar for a very simple and a very valid reason. 11. As the text of the arbitration agreement itself clearly indicates there is neither any pre-condition nor any requirement of the petitioner doing any act or being under any obligation to perform any act as a condition precedent for reference of disputes to the Arbitrator. The opening part of the arbitration agreement clearly lays down that all questions, disputes or differences in relation to or in connection with the contract shall be referred for arbitration. The only exception to this broad, all embarrassing, plenary scope of reference of disputes is that only such questions, disputes or differences in respect of which the decision has not been final or conclusive are referable to arbitration. It is not the contention of the respondents before me that from out of the disputes mentioned by the petitioner either in the present petition filed in this Court or in its notice dated 2nd April, 2007, there was any question, dispute or difference with respect to which the decision had not been final or conclusive. Whether the claims made by the petitioner are arbitrable or not, whether these are admissible or not, or whether these are basically even maintainable or not, are issues which would fall squarely for the 6 consideration of the Arbitrator. Similarly, whether the disputes raised by the petitioner are pre-mature and hence the petitioner's claims at this stage are non-arbitrable or whether the petitioner has been guilty of any non- performance on its part and, therefore, the respondents are not liable to pay any amount to the petitioner also are issues which would fall squarely for the consideration of the Arbitrator. 12. 12. The broad sweep of the arbitration agreement does not leave any option with me but to appoint an Arbitrator because only after the Arbitrator is appointed and he enters upon the reference, will he be in a position to decide about the arbitrability, admissibility or maintenance of the claims of the petitioner. If the petitioner is found by the Arbitrator to be guilty of any non-performance or if the Arbitrator finds that the claims of the petitioner are pre-mature because of any non-observance by it of any requirement under the agreement, the Arbitrator will pass appropriate order or might even go to the extent of either rejecting the claims of the petitioner or making the petitioner liable to perform what was expected of him. This of course cannot be a ground for declining the request of the petitioner for appointment of the Arbitrator. This Court can decline the request of the petitioner to appoint the Arbitrator only if the arbitration agreement specifically, in clear and categorical terms contains a covenant to that effect. As the perusal of the agreement in question suggests that there is no such covenant in the arbitration agreement between the parties. The request of the petitioner has, therefore to be accepted and allowed. 13. The respondents had the right as well as an obligation of sending to the petitioner a panel of three persons within a periaod of thirty days from the date of receipt of the notice from them as per Clause 55.1(ii) of the Arbitration Agreement. They did not do so. Therefore, in terms of Section 11(6) of 1996 Act, they have forfeited their right of sending to the petitioner such a penal of three persons for enabling the petitioner to choose one out of this penal as the Arbitrator. Because of such failure on the part of the respondents to do so, now I have no option but to invoke and exercise my jurisdiction vested in me under Section 11(6) of the Act to appoint an Arbitrator. 14. With the consent of the parties, Brig. J.K. Narang, Chief Engineer, Project Deepak is hereby appointed as a Single Member Arbitral Tribunal to adjudicate upon the disputes between the parties. 14. With the consent of the parties, Brig. J.K. Narang, Chief Engineer, Project Deepak is hereby appointed as a Single Member Arbitral Tribunal to adjudicate upon the disputes between the parties. The parties are at liberty to file their claims/counter claims before the learned Arbitrator, who is directed to enter upon the Reference immediately and pass the arbitral award at his convenience but as expeditiously as possible. 15. The fee of the Arbitrator in lump sum is fixed at Rs. 20,000/-, which shall be paid to him in equal shares by both the parties. The petition is disposed of.