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2008 DIGILAW 973 (DEL)

R. N. GUPTA v. UNION OF INDIA.

2008-10-15

HIMA KOHLI

body2008
ORDER HIMA KOHLI, J. The present petition is filed by the petitioner under Section 11(6) of the Arbitration and Conciliation Act, 1996 praying inter alia for appointment of an arbitrator to adjudicate upon the disputes and differences between the parties. Briefly stated, the facts of the case are that the petitioner is in the work of construction and entered into an agreement with the respondent for execution of construction of office building for NATP at CTP Complex, Pusa, New Delhi - 110012 on a tendered amount of Rs. 1,63,85,453. As per the agreement, the date of commencement of the work was 26.04.2003 and the date of completion was 25.10.2003. As per the counsel for the petitioner, the petitioner started and completed the work on 08.03.2004, to the satisfaction of the respondent. Thereafter, the petitioner submitted a statement of claim to the respondent, vide letter dated 26.08.2005, claiming a sum of Rs. 8,66,550. It is stated that despite the aforesaid demand, the respondent did not release the payment to the petitioner and as a result the petitioner issued a legal notice dated 27.01.2007 to the respondent invoking Clause 25 of the agreement which provides for appointment of an adjudicator to decide the disputes between the parties within a period of 28 days of the receipt of a notification of a dispute. It is stated by the counsel for the petitioner that despite his invoking the aforesaid clause and appointment of Mr. P. Krishnan, Former DGW, CPWD, as an adjudicator, no further action was taken for adjudication, thus compelling the petitioner to issue yet another legal notice dated 11.05.2007, invoking the arbitration clause governing the parties being Clause No. 25. As the respondent failed to respond to the aforesaid legal notice, counsel for the petitioner submits that the petitioner was compelled to file the present petition. The present petition was filed on 12.07.2007 and notice was issued thereon on 13.07.2007. Appearance was entered on behalf of the respondent on 29.09.2008. A reply has been filed to the petition. It is not disputed in the reply that the respondent failed to act after receiving the notice dated 11.05.2007 from the petitioner and that the respondent did not appoint an arbitrator to adjudicate the disputes that have arisen between the parties. Appearance was entered on behalf of the respondent on 29.09.2008. A reply has been filed to the petition. It is not disputed in the reply that the respondent failed to act after receiving the notice dated 11.05.2007 from the petitioner and that the respondent did not appoint an arbitrator to adjudicate the disputes that have arisen between the parties. Instead, the stand of the respondent is that the respondent has already paid the entire amount due and payable to the petitioner and no dispute subsists. Considering the fact that the respondent has failed to appoint an arbitrator in terms of Clause 25.3(f) of the agreement governing the parties, this court has no option but to allow the present petition and appoint an arbitrator to adjudicate the disputes between the parties. In the case of Datar Switchgears Ltd. vs. Tata Finance Ltd. and another reported in (2000) 8 SCC 151 = 2000 (3) Arb. LR 447 (SC) the Supreme Court has held that if the vacancy of an arbitrator is not filled till the party approaches the court and files a petition for appointment of an arbitrator by the designated authority of the Chief Justice of that court under Section 11(6) of the Arbitration and Conciliation Act, the right to supply the vacancy by the opposite party stands extinguished. The ratio of the aforesaid case was approved by the Supreme Court in Punj Lloyd Ltd. vs. Petronet MHB Ltd. reported in (2006) 2 SCC 638 = 2006 (1) Arb. LR 528 (SC) and it was again followed by a Division Bench of this court in the case of Delkon (India) Pvt. Ltd. vs. G.M., Bharat Heavy Electricals Ltd. reported in 120 (2005) DLT 542 (DB) = 2005 (2) Arb. LR 272 (Del.) (DB). In view of the aforesaid judgments, the respondent has lost its right to appoint an arbitrator, it having failed to do so within 30 days from the date of receipt of the notice from the petitioner for appointment of an arbitrator or even prior to the date of institution of the present petition. In these circumstances, the present petition is allowed. Justice Manju Goel (Retd.) is appointed as the sole arbitrator to adjudicate all the disputes arising between the parties. The parties shall share the fee equally, which shall be fixed by the arbitrator. In these circumstances, the present petition is allowed. Justice Manju Goel (Retd.) is appointed as the sole arbitrator to adjudicate all the disputes arising between the parties. The parties shall share the fee equally, which shall be fixed by the arbitrator. The parties shall appear before the arbitrator on 12th November, 2008 at 4.30 p.m. The Registry is directed to forward a copy of the order to the arbitrator forthwith. The parties are also directed to intimate the arbitrator about the order. The petition is disposed of.