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Rajasthan High Court · body

2007 DIGILAW 557 (RAJ)

Engineering Project (India) Ltd. v. Jaipur Stock Exchange Ltd.

2007-03-14

SHIV KUMAR SHARMA

body2007
JUDGMENT 1. - This application has been filed by the applicant company under section 11(6) of the Arbitration and Conciliation Act, 1996 (for short 'the Act') with the prayer to appoint independent Arbitrator. 2. The applicant company, a Government of India Enterprise under the administrative control of the Department of Heavy Industry (Ministry of Heavy Industries & Public Enterprise), New Delhi is incorporated with an object to take up projects in the filed of construction of buildings, roads etc. vide agreements dated October 29, 1993 and October 5, 1994 the respondent awarded construction and sanitary works to the applicant company. After executing the works the applicant company vide letter dated June 6, 2003 asked the respondent to make payment of outstanding and dues. The respondent in turn informed the applicant company that a committee was to be constituted for finalising the pending bills. Since the outstanding sum Rs. 2,40,71,275.23 was not paid by the respondent. The applicant company in view of the arbitration clause 35 of the agreement wrote a letter to respondent on January 12, 2004 for appointment of the Arbitrator within a period of 30 days. But the respondent failed to appoint the arbitrator within the stipulated period. In this background the instant application for appointment of Arbitrator has been filed. 3. The respondent opposed the application by filing a detailed reply raising various objections in regard to maintainability of the application. 4. I have given my thoughtful consideration to the rival submissions. 5. Before proceeding further it will be appropriate to consider the salient features of the arbitration procedure as agreed to by the parties under clause 35 of the agreement which reads as under: "35. Settlement of Dispute, Arbitration All disputes and differences of any kind whatever arising out of or in connection with the contract or the carrying out of works (whether during the progress of the works or after their completion, and whether before or after the determination abandonment or breach of the contract) shall be referred to and settled by the Architects who shall state their decision in writing. Such decision maybe in the form of a final certificate or otherwise. Such decision maybe in the form of a final certificate or otherwise. The decision of the Employer with respect to any of the excepted matters shall be final and without appear at stated in clause No. 33 but if either the employer or the Contractor be dissatisfied with the decision of the Architect or any matter question or the dispute of any kind (except any of the excepted matters) or as to withholding by the Architect of any certificate to which the contractor may claim to be entitled then an in any such case either party (the employer or the Contractor) may within 28 days after raising such dispute in writing give a written notice to the other party requiring that such matters in dispute be arbitrated upon. such written notice shall specify the matters which are in dispute and such dispute or difference of which such written notice has been given and no other shall be and is hereby referred to the arbitration and final decision of a single Arbitrator to be agreed upon and appointed by both the parties or in case of disagreement as to the appointment of a single arbitrator, to the arbitration of two Arbitrators one to be appointed by each party which Arbitrators shall before taking upon themselves the burden of Reference appoint an umpire. The Arbitrator, the Arbitrators or the Umpire shall have power to open up, review and revise any certificate, opinion, requisition or notice, save regard to the excepted matters referred to in clause No. 33 and to determine all matters in dispute which shall be submitted to him or them and of which notice shall have been given as aforesaid. However the award so given by the Arbitrator/Arbitrators/Umpire shall be reasoned and speaking in all details. Upon every or any such reference the cost of and incidental to the Reference and Award respectively shall be in the direction of the Arbitrator or "Arbitrators" or the Umpire who may determine the amount thereof, or direct the same to be taxed as between attorney and client or as between party and party and shall direct by whom and whom and in what manner the same shall be borne and paid. The submission shall be deemed to be a submission to Arbitration within the meaning of the Indian Arbitration Act 1940 or any statutory modification thereof. The submission shall be deemed to be a submission to Arbitration within the meaning of the Indian Arbitration Act 1940 or any statutory modification thereof. The award of the Arbitrator or Arbitrators or the Umpire shall be final and binding on the parties. Such reference except as to the with holding by the Architects of any Certificates under clause 30 to which the Contractor claims to be entitled shall not be opened or entered upon until after the completion or alleged completion of the works or until after the practical cessation of the works arising from any cause unless with written consent of Employer and the Contractor. Provided always that the Employer shall not withhold the payment of the Interim Certificate nor the Contractor in anyway delay the carrying out of works by reason of any such matter, question or dispute referred to Arbitration but shall proceed with the work with all due diligence and shall until the decision of the Arbitrator or Arbitrators or the Umpire be given abide by the decision of the employer with the advice of the Architects and no award of the Arbitrator or Arbitrator or the Umpire shall relieve the Contractor of his obligation to adhere strictly to the Instructions with regard to the actual carrying out of the work. The Employer and the Contractor hereby also agree that Arbitration under this clause shall be condition precedent to any right or Action under the Contract." (Emphasis Supplied) 6. A bare reading of the instant application demonstrates that the applicant, without first following the procedure agreed to between the parties, served notice to the respondent to appoint arbitrator within 30 days and thereafter invoked the jurisdiction of this court under section 11(6) of the Act. The applicant who entered into contract after fully understanding the impact of clause 35, cannot be allowed to deviate from the terms so agreed. 7. In National Highways Authority of India v. Bhumihiway DDB Ltd. [JT 2006(12) SC 334] their Lordships of the Supreme court indicated thus : (para 42) "...the parties have entered into a contract after fully understanding the import of the terms so agreed to from which there cannot be any deviation. The courts have held that the parties are required to comply with the procedure of appointment as agreed to and the defaulting party cannot be allowed to take advantage of its own wrong." 8. The courts have held that the parties are required to comply with the procedure of appointment as agreed to and the defaulting party cannot be allowed to take advantage of its own wrong." 8. Since the applicant did not comply with the procedure contained in clause 35 of the agreement, no cause of action has arisen to seek appointment of Arbitrator under Section 11(6) of the Act. 9. For these reasons the application stands rejected without any order as to costs.Application Rejected. *******