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2008 DIGILAW 1241 (RAJ)

Sohan Lal Pungaliya v. The Union of India

2008-05-06

MANAK MOHTA

body2008
JUDGMENT 1. - Heard learned counsel for the parties in respect of application filed Under section 11(6) of the Arbitration and Conciliation Act, 1996 for the appointment of Arbitrator. 2. As per the application, the applicant is a partnership firm. The railways awarded a work contract to the applicant for "'supplying and stacking of hand broken stone ballast (hard stone) in yards between the Stations Raika-Bagh (excluding) to Bhagat- Ki-Kothi and upto Km of 629.100 of Jodhpur-Marwar Junction." and an agreement No.Dy./JU/103 of 96-97 dated 13.9.1996 (Annex.1) was executed between the parties and a work-order dated 12.8.1996 was given to the applicant. As per the work order, the work was to commence from 12.8.1996 and was to be completed by 11.1.1997. It alleged by the applicant that despite passing of one month, the chart specifying the site for sending the stone ballast was not provided to him, on that, the applicant made representation dated 13.9.1996 (Annex.2) to the Railways. Later on, the site was provided by Railways but as per the applicant since the site was not appropriate (was having big holes and large trees standing thereon), therefore, the applicant kept on asking the railways for providing suitable site so that the material could be supplied but no heed was given and as the time was about to expire as there was inaction on the part of the Railways but contrary to that the railways vide its notice dated 25.1.1997 (Annex.9) rescinded the contract with immediate effect and intimated the contractor that as the contractor had failed to discharge the contractual obligations and complete the work within the stipulated time, therefore, as per terms of the contract under Clause 62 of the General Conditions of the Contract, the railway reserves the right to claim damages. Thereafter the applicant received interim order from the court and the duration of the work was increased upto 28.2.1997 and the Railways were restrained from cancelling the contract but vide letter dated 21.1.1997 the railways invited fresh tender for the execution of same work, the contract between the parties was rescinded by the railways.Thus a dispute arose between the parties. It was amicably agreed that in case of dispute of any sort, the matter will be resolve through arbitral proceedings. The contractor served legal notice dated 19.4.1997 (Annex.12) on the Department and thereby demanded his dues to the tune of Rs. It was amicably agreed that in case of dispute of any sort, the matter will be resolve through arbitral proceedings. The contractor served legal notice dated 19.4.1997 (Annex.12) on the Department and thereby demanded his dues to the tune of Rs. 8,63,222/- with interest @ 18% per annum and also made a request to appoint arbitrator to resolve the dispute as per the Clause 64 of the Standard General Conditions of Contract but no reply was given, despite receipt of notice and lapse of reasonable time, hence, this application has been moved under Section 11(6) of the Act of 1996 before this Court for appointment of independent arbitrator. 3. A reply to the application was submitted wherein it was stated the contractor was time and again asked to speed up the work by mobilising additional resources, however, he was not in a position to execute the work due to poor resources. The applicant had not done any work even after the grant of extended time and additional period by the learned Civil Judge vide his order dated 7.1.1997, as such, the railway was forced to terminate the contract vide its letter dated 25.1.1997 and after that only fresh tenders were invited for the same work in order to complete the left-over work. It was further stated that the demand of appointment of arbitrator was beyond limitation as the applicant has filed the application after a lapse of about two years instead of filing the same within the prescribed time under Clause 64(1)(iii) of GCC-89. Further as per the railways, there is no provision to appoint an independent arbitrator in the agreement executed between the parties. The applicant has invoked the provisions of Section-11(6) of the Arbitration and Conciliation Act, 1996 prior to the decision in the matter under the provisions of Section 11(4) and 11(5). A liquidated damage of Rs.19.43 lacs was ordered to be recovered by the contractor, therefore due amount was withheld, thus, a prayer was made to dismiss the application. 4. During the course of arguments, the learned counsel for the parties reiterated their submissions on the lines of the pleadings. 5. A liquidated damage of Rs.19.43 lacs was ordered to be recovered by the contractor, therefore due amount was withheld, thus, a prayer was made to dismiss the application. 4. During the course of arguments, the learned counsel for the parties reiterated their submissions on the lines of the pleadings. 5. Learned counsel for the applicant stated that before filing application for appointment of independent abitrator, the applicant had moved to the concerned authority under the relevant provisions of the contract to appoint arbitator but no heed was given to his request and reasonable time has elapsed. The concerned authority on the contrary started recovery proceedings on baseless grounds to save from the responsibility arising out of the contract. It was urged that as the appointment of arbitrator has not been made, therefore, now they have abondoned their all rights to proceed with the matter. Learned counsel for the applicant also placed reliance on the decision given in the case of Union of India v. M/s. Bharat Battery Manufacturing Co. (P) Ltd., Western Law Cases (SC) Civil 2008(1) 185). 6. On the contrary, the learned counsel for Union of India stated that the contentions placed by the learned counsel for the applicant are not sustainable. The applicant-contractor himself was at fault in not completing the work in time. There was no referable dispute to arbitrator. Thus, the application is not sustainable. It was also stated that under the provisions of the contract only railway personnel could be appointed as an Arbitrator. Learned counsel for the respondent placed reliance on the decision given in the case of Union of India v. Krishna Kumar given in Civil Appeal No.6324 of 2004 decided on 19.7.2007 and prayed that the application may kindly be rejected. 7. I have heard both the learned counsel for the parties and considered the rival contentions advanced before me. I have gone through the material available on record. 8. After considering the contentions and from the bare perusal of record it is the admitted position between the parties that a work-contract for the aforesaid work was given to the applicant and an agreement (Annex.1) was executed in this respect between the parties having provision that in case of any dispute arises, that dispute will be settled through arbitral proceedings. After considering the contentions and from the bare perusal of record it is the admitted position between the parties that a work-contract for the aforesaid work was given to the applicant and an agreement (Annex.1) was executed in this respect between the parties having provision that in case of any dispute arises, that dispute will be settled through arbitral proceedings. Further, from the perusal of the material placed by the parties and the submissions made thereon without commenting anything on the merit of the claim, the applicant has raised his claims and those have not been satisfied. Thus, dispute exists between the parties and for resolving those dispute provision of arbitration clause is there in the agreement itself, the non petitioner should have proceeded in that respect which is prima facie established, that dispute has not been referred. It is also borne out from the record that despite lapse of reasonable time after giving notice and request to appoint arbitrator, the matter has not been referred, which was required to be referred to in these circumstances they have waived their right to proceed. The conclusion finds support from the judgment cited by the applicant. Now the contention submitted by the non-applicant that arbitrator should have been appointed as per Clause 64 of the GCC are not sustainable and the judgment cited by the non-applicant is not helping their contentions. It seems in that judgment, the concerned parties were directed to appear before Arbitrator under Section 11(6) of the Act of 1996 without applying under Clause 64 but that is not the position in the present case. Here the applicant approached to authority and demanded to appoint arbitrator but the authority has failed to do so, thus, an independent Arbitrator is required to be appointed to resolve the disputes between the parties. 9. In the net result, the application is allowed. Shri Gulab Singh Bhandari, Retired Additional Chief Engineer (Irrigation), Government of Rajasthan, presenting residing at 3rd 'C" Road, Sardarpura, Jodhpur (Raj.) is hereby appointed as the Sole Arbitrator to resolve the dispute between the parties. The parties are free to raise their dispute, claim, counter-claim etc., before the Arbitrator. It is further directed that the initial expenses of Rs.10,000/- shall be deposited by the applicant with the Arbitrator so that arbitral proceedings may be started. The parties are free to raise their dispute, claim, counter-claim etc., before the Arbitrator. It is further directed that the initial expenses of Rs.10,000/- shall be deposited by the applicant with the Arbitrator so that arbitral proceedings may be started. The deposit of initial amount will be treated as part of fee subject to final determination of fees. The fee of arbitrator and the cost of arbitration shall be determined by the Arbitrator himself and that shall be borne equally by both the parties. The Arbitrator may be informed accordingly. The application stands disposed of.Application allowed. *******