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Gujarat High Court · body

2009 DIGILAW 278 (GUJ)

Marwah Company v. Chairman & Managing Director, National Thermal Power Corpn

2009-04-17

M.R.SHAH

body2009
ORDER :- Present application has been preferred by the petitioner original applicant to substitute/appoint another Arbitrator to resolve the dispute between the parties with respect to LOA No. 157 dated 10-6-1994 for construction of 300 CUM capacity overhead water tank for JGGPP. 2. The petitioner-Contractor was awarded works contract being LOA No. 157 dated 10-6-1994 for construction of 300 CUM capacity overhead water tank for Jhanor Gandhar Gas Power Project, Jhanor, District-Bharuch. It was the case on behalf of the petitioner that though the petitioner completed the work without any complaint from the respondents, the final bill was not paid to the petitioner. Therefore dispute arose between the parties and vide communication dated 12-6-1998 the petitioner demanded outstanding amount from the respondents and also requested them to appoint an arbitrator under clause 56 of the General Conditions of Contract for Civil Works. As per the petitioner, in spite of receipt of the said letter, the respondents have not made payment of the said amount nor appointed an arbitrator. Therefore, the petitioner approached this Court by way of Arbitration Petition No. 77 of 2003 under Section 11 of the Arbitration and Conciliation Act, 1996 to appoint arbitrator to resolve the dispute between the parties with respect to aforesaid works order/contract. That the learned single Judge/nominee of the Hon'ble Chief Justice vidl:': order dated 17-3-2005 with the consent' of the learned Advocates appearing on behalf of the respective parties appointed one Mr. M. D. Dave, retired City Civil & Sessions Judge, Ahmedabad to be sole arbitrator with respect to the dispute arising from the contract dated 10-6-1994. Said petition came to be disposed of in above terms. 3. It is the case on behalf of the applicant that thereafter, the petitioner appeared before the learned Arbitrator and submitted their statement of claim. That there were five to six sittings before the learned Arbitrator. However, the learned Arbitrator vide letter dated 15-1-2007 informed the Advocate of the petitioner that due to his personal reason, he is unable to proceed further with the matter and continue as Sole Arbitrator and requested to do needful in the matter. As per the petitioner, the learned Arbitrator also requested to take away the records of the aforesaid proceedings produced before him by the parties. As per the petitioner, the learned Arbitrator also requested to take away the records of the aforesaid proceedings produced before him by the parties. It is the case on behalf of the petitioner that in spite of repeated request to the learned Arbitrator not to resign and request to continue as sole arbitrator, the learned Arbitrator has not accepted the same and is not ready to proceed further with the arbitrator proceedings. Hence, the applicant has preferred present appl1catton to substitute/appoint another Arbitrator to resolve the dispute between the parties in place of Mr. M. D. Dave, retired City Civil & Sessions Judge, Ahmedabad who was earlier appointed as sole arbitrator to resolve the dispute between the parties. 4. Mr. Uday Vyas, learned Advocate for the applicant has submitted that sole arbitrator was appointed by the learned single Judge. nominee of the Hon'ble Chief Justice under Section 11(6) of the Arbitration and Conciliation Act. 1996 with the consent of the learned Advocates appearing on behalf of the respective parties. It is submitted that Mr. M. D. Dave, retired City Civil & Sessions Judge, Ahmedabad was appointed as sole arbitrator with the consent of the learned Advocates appearing on behalf of the respective parties and that there were five to six sittings before the learned Arbitrator also. However. due to his personal reason, the learned Arbitrator is not ready to continue as sole "arbitrator and proceed further with the arbitration proceedings. Therefore, it is request~ to allow present application and substitute/appoint another Arbitrator in place of Mr. M. D. Dave, retired City Civil & Sessions Judge, Ahmedabad to resolve the dispute between the parties. 5. Petition is opposed by Mr. Abishek Mehta. learned Advocate for M/s. Trivedi and Gupta for respondent-National Thermal Power Corporation Ltd. (NTPC). Affidavit-inreply. is also filed on behalf of the respondent-Corporation opposing present application. Relying upon affidavit-in-reply it is submitted by the learned Advocate appearing on behalf of the respondent-Corporation that present application is not maintainable for want of jurisdiction. It is further submitted that claims and demands are contrary to and/or outside the terms and conditions of the contract/agreement between the parties and are not arbitrable and beyond the scope of Section 11 of the Arbitration and Conciliation Act, 1996. It is further submitted that as held by the Hon'ble Supreme Court in the case of M/s. S.B.P. & Co. It is further submitted that as held by the Hon'ble Supreme Court in the case of M/s. S.B.P. & Co. v. Patel Engineering Ltd. reported in 2005 (7) SCC 610 (sic) and followed in the case of India Household & Healthcare Ltd. v. L. G. Household & Healthcare Ltd., reported in AIR 2007 SC 1376 while making appointment of Arbitrator and referring the parties to the arbitration under Section 11 of the Arbitration Act, the Hon'ble Chief Justice and/or its nominee are required to consider various aspects including the aspect of jurisdiction in relation to the contract between the parties and whether there is an arbitration agreement in terms of the provisions of the said Act and whether the claim was a dead one or a time barred one and whether the parties have concluded the transaction by recording satisfaction of their mutual rights and obligations or by receiving final payment without objection. It is submitted that in the present case by virtue of prolonged deliberations, an amicable settlement was arrived at by and between the applicant and the respondent-Corporation by way of full and final settlement which was arrived at during the meeting held on 6-1-2001 and as the dispute was settled finally there was no arbitrable dispute at all which is required to be referred to arbitration for which sole arbitration is to be appointed. It is further submitted that as such it is the applicant-contractor who was responsible for delay in work and therefore, now sole arbitrator is not required to be appointed and/or substituted. Mr. Mehta. learned Advocate for the respondent-Company has heavily relied upon aforesaid decisions as well as another decision of the Hon'ble Supreme Court in the case of M/s. P. K. Ramaiah and Company v. Chairman and Managing Director. National Thermal Power Corporation, reported in 1994. Supp (3) SCC 126. Even after hearing of the present application was concluded and the matter was kept for orders. thereafter, learned Advocate appearing on behalf of the respondent-Corporation has circulated one note dated 19-3-2009 addressed to the Registrar, High Court of Gujarat that in the meanwhile judgment in the case of Niraj Kumar Bohra v. Union of India, reported in AIR 2009 Cal 59 has been rendered by the Calcutta High Court and respondent would be relying upon said judgment also. Thus. Thus. the learned Advocate for the respondent Corporation has also relied upon decision of the Calcutta High Court in the case of Niraj Kumar Bohra (supra) in support of his submission that even after appointment of arbitrator by the Hon'ble Chief Justice under Section 11(6) of the Arbitration Act, order of appointing arbitrator can be recalled. Therefore, it is requested to dismiss present application. 6. Heard the learned Advocates appearing on behalf of the respective parties at length for final disposal. 7. At the outset. it is required to be noted that as such vide order dated 17-3-2005 in Arbitration Petition No. 77 of 2003, the learned single Judge and Nominee of the Hon'ble Chief Justice had appointed sole arbitrator with respect to dispute arising from the contract dated 10-6-1994 and one Mr. M. D. Dave, retired City Civil & Sessions Judge, Ahmedabad was appointed as sole arbitrator. Said order came to be passed under Section 11 (6) of the Arbitration Act. It is also required to be noted that said application was allowed/disposed of and Mr. M. D. Dave, retired City Civil & Sessions Judge. Ahmedabad was appointed as sole arbitrator with the consent of the learned Advocates appearing on behalf of the, respective parties. That thereafter sole arbitrator had in fact proceeded further with the Arbitration proceeding also. However, subsequently after a period of one and half year the said sole arbitrator has shown his disinclination to continue as sole arbitrator and has requested the petitioner to obtain appropriate order's as he wants to resign as sole arbitration therefore as such present application can be said to be for substitution of the arbitrator already appointed and it cannot be salt to be fresh application for appointment of sole arbitrator afresh under Section 11(6) of the Arbitration Act. In backdrop of above present application is required to be considered. 8. Considering the above, short question which is posed for consideration of this Court is whether once sole arbitrator was appointed prior to decision of the Hon'ble Supreme Court in the case of M/s. S.B.P. & Co. v. Patel Engineering Ltd. (supra) and in the case of India Household and Healthcare Ltd. v. L. G. Household & Healthcare Ltd. (supra) subsequently for whatever reason arbitrator is to be substituted, in that case whether decision of the Hon'ble Supreme Court in the case of M/s. S.B.P. & Co. v. Patel Engineering Ltd. (supra) and in the case of India Household and Healthcare Ltd. v. L. G. Household & Healthcare Ltd. (supra) subsequently for whatever reason arbitrator is to be substituted, in that case whether decision of the Hon'ble Supreme Court in the case of M/s. S.B.P. & Co. v. Patel Engineering Ltd. (supra) and in the case of India Household and Healthcare Ltd. v. L. G. Household & Healthcare Ltd. (supra) would be applicable and whether entire question for appointment of sole arbitrator is required to be reconsidered in light of the observations of the Hon'ble Supreme Court in the aforesaid decisions, while substituting sole arbitrator? 8.1 Relying upon aforesaid two decisions, the learned Advocate appearing on behalf of the respondent-Corporation has requested to dismiss present' application by submitting that there is no arbitrable dispute, there was no valid arbitration agreement and that there was no live claim in view of settlement between the parties in the year 2001. Learned Advocate for the respondent-Corporation has also relied upon decision of the Calcutta High Court in the case of Niraj Kumar Bohra (supra) in support of his submission that even in a case where sole arbitrator was appointed by the Hon'ble Chief Justice under Section 11 (6) of the Arbitration Act, said order can be recalled. Therefore, it is requested to dismiss present application and not to appoint sole arbitrator for resolving the dispute between the parties arising-out of the contract dated 10-6-1994. 9. As stated herein above and at the outset and at the cost of repetition, it is to be noted that present application is neither under Section 11 (6) of the Arbitration Act for appointment of sole arbitrator afresh nor present application is to review the order passed by the learned single Judge appointing sole arbitrator and/or to recall order of appointing sold arbitrator. Present application has been filed though termed as for appointment but in substance it is for substitution of sole arbitrator as sole of arbitration has shown his disinclination to continue as sole arbitrator to resolve the dispute between the parties. Present application has been filed though termed as for appointment but in substance it is for substitution of sole arbitrator as sole of arbitration has shown his disinclination to continue as sole arbitrator to resolve the dispute between the parties. Therefore, the contention raised on behalf of the respondent-Corporation with respect to claims and demands are contrary to and/or outside the terms and conditions of the contract/agreement between the parties, that there is no live claim and/ or there was not arbitrable dispute, are not required to be considered in the present application, once sole arbitrator was appointed earlier by the learned nominee of the Hon'ble Chief Justice under Section 11 (6) of the Arbitration Act and that too with the consent of the learned Advocates appearing on behalf of the respective parties. It is now not open for the respondent to make grievances referred to herein above and submit that sole arbitrator is not required to be appointed. Once sole arbitrator was appointed at the relevant time considering law prevailing at relevant time, merely on the basis of subsequent decisions, it is not open for the respondent-Corporation to make grievance with respect to appointment of sole arbitrator who was already appointed much prior to subsequent decisions and in fact arbitration proceedings were proceeded further also. Even in the case of Patel Engineering Ltd. (supra), the Hon'ble Supreme Court has already made it very much clear that appointment of arbitrator or Arbitral Tribunal already made prior to said decisions, are to be treated as valid and all objections being left to be decided under Section 16 of the Act. On fair reading of para 47 of the Patel Engineering Ltd. (supra), the Hon'ble Supreme Court has made clear that said decision would be applicable prospectively, para 47 of Patel Engineering Ltd. (supra) is as under : "47. We, therefore, sum up our conclusions as follows: (i) The power exercised by the Chief Justice of the High Court or the Chief Justice of India under Section 11 (6) of the Act is not an administrative power. It is a judicial power. (ii) The power under Section 11 (6) of the Act, in its entirety, could be delegated, by the Chief Justice of the High Court only to another Judge of that Court and by the Chief Justice of India to another Judge of the Supreme Court. It is a judicial power. (ii) The power under Section 11 (6) of the Act, in its entirety, could be delegated, by the Chief Justice of the High Court only to another Judge of that Court and by the Chief Justice of India to another Judge of the Supreme Court. (iii) In case of designation of a Judge of the High Court or of the Supreme Court, the power that is exercised by the designated, Judge would be that of the Chief Justice as conferred by the statute. (iv) The Chief Justice or the designated Judge will have the right to decide the preliminary aspects as indicated in the earlier part of this judgment. These will be, his own jurisdiction, to entertain the request, the existence of a valid arbitration agreement, the existence or otherwise of a live claim, the existence of the condition for the exercise of his power and on the qualifications of the arbitrator or arbitrators. The Chief Justice or the Judge designated would be entitled to seek the opinion of an institution in the matter of nominating an arbitrator qualified in terms of Section 11(8) of the Act if the need arises but the order appointing the arbitrator could only be that of the Chief Justice or the Judge designate. (v) Designation of a district Judge as the authority under Section 11 (6) of the Act by the Chief Justice of the High Court is not warranted on the scheme of the Act. (vi) Once the matter reaches the arbitral tribunal or the sole arbitrator, the High Court would not interfere with orders passed by the arbitrator or the arbitral tribunal during the course of the arbitration proceedings and the parties could approach the Court only in terms of Section 37 of the Act or in terms of Section 34 of the Act. (vii) Since an order passed by the Chief Justice of the High Court or by the designated Judge of that Court is a judicial order, an appeal will lie against that order only under Article 136 of the Constitution of India to the Supreme Court. (viii) There can be no appeal against an order of the Chief Justice of India or a Judge of the Supreme Court designated by him while entertaining an application under Section 11 (6) of the Act. (viii) There can be no appeal against an order of the Chief Justice of India or a Judge of the Supreme Court designated by him while entertaining an application under Section 11 (6) of the Act. (ix) In a case where an arbitral tribunal has been constituted by the parties without having recourse to Section 11 (6) of the Act, the arbitral tribunal will have the jurisdiction to decide all matters as contemplated by Section 16 of the Act. (x) Since all were guided by the decision of this Court in Konkan Railway-Corpn. Ltd. v. Rani Construction Pvt. Ltd: ( (2002) 2 SCC 388 ) : ( AIR 2002 SC 778 ) and orders under Section 11(6) of the Act have been made based on the position adopted in that decision, we clarify that appointments of arbitrators or arbitral- tribunals thus far made, are to be treated as valid, all objections being left to be decided under Section 16 of the Act. As and from this date, the position as adopted in this judgment will govern even pending applications under Section 11 (6) of the Act. xi) Where District Judges had been designated by the Chief Justice of the High Court under Section 11 (6) of the Act, the appointment orders thus far made by them will be treated as valid; but applications if any pending before them as on this date will stand transferred, to be dealt with by the Chief Justice of the concerned High Court or a Judge of that Court designated by the Chief Justice. xii) The decision in Konkan Railway Corpn. Ltd. v. M~hul Construction Pvt. Ltd. ( AIR 2000 SC 2821 ) is overruled. 10. In view of above, it is not open for the respondent-Corporation now to make grievance with respect to appointment of sole arbitrator in light of observations of the Hon'ble Supreme Court in the case of Patel Engineering Ltd. (supra). Once appointment of arbitrator or arbitral tribunal was already made, subsequently in light of subsequent decision in Patel Engineering Ltd. (supra) it is not open for the respondent to make grievance that in light of above decision, arbitrator is not required to be appointed. Once appointment of arbitrator or arbitral tribunal was already made, subsequently in light of subsequent decision in Patel Engineering Ltd. (supra) it is not open for the respondent to make grievance that in light of above decision, arbitrator is not required to be appointed. As stated herein above, present application is for substitution of sole arbitrator and it cannot be construed that it is an application for appointment of sole arbitrator for the first time under Section 11 (6) of the Arbitration Act. Therefore, objection raised on behalf of the respondent-Corporation referred to herein above are not required to be considered now by this Court and as observed by the Hon'ble Supreme Court in the case of Patel Engineering Ltd. (supra) itself, all questions are required to be considered by arbitrator or arbitral tribunal under Section 16 of the Arbitration Act in accordance with law. 11. Now so far as the reliance placed upon decision of the Calcutta High Court in the case of Niraj Kumar Bohra (supra) is concerned, on facts same would not be applicable to the facts of the present case and same would not, be of any assistance to the respondent-Corporation. Calcutta High Court in the said case found that considering arbitration clause the parties agreed that they would resolve their dispute if any, through a particular mode by a qualified arbitrator as per the qualification stipulated in the agreement and the parties agreed that in case it was not possible they would not go for arbitration and therefore, it was found that appointment of an arbitrator who was not qualified in terms of arbitration clause• would be a situation compelling the parties to resolve their dispute through arbitration although not agreed upon by them. Law does not permit to do so: Therefore, on facts considering arbitration clause Calcutta High Court held that appointment of arbitrator was dehors the agreement entered into by and between the parties and such appointment was invalid in the eye of law and as a consequence the Calcutta High Court set aside the award. Therefore, decision of the Calcutta High Court would not be applicable in the facts of the present case. Even otherwise in light of para 47 of Patel Engineering Ltd. (supra) it is not possible to accept the submission/contention on behalf of the respondent-Corporation. Therefore, decision of the Calcutta High Court would not be applicable in the facts of the present case. Even otherwise in light of para 47 of Patel Engineering Ltd. (supra) it is not possible to accept the submission/contention on behalf of the respondent-Corporation. As such on considering decision of the Calcutta High Court in the case of Niraj Kumar Bohra (supra), this Court is not in agreement with said decision. However, as on facts said decision would not be applicable to the facts of the present case, this Court is not however considering same and observing anything further on merits on the said decision. Now in view of above when the sole arbitrator who was already appointed by the learned single Judge as nominee of the Hon'ble Chief Justice under Section 11 (6) of the Arbitration Act vide order dated 17-32005 with the consent of the learned Advocates appearing on behalf of the respective parties, has shown his disinclination to continue as sole arbitrator, in his place another sole arbitrator is to be nominated/appointed/substituted. 12. In view of above, Mr. P. B. Raval, Retd. Judge of City Civil Court, Ahmedabad, No.6, Hirak Center, Near Nehru Park, Vastrapur, Ahmedabad-15 is now appointed as sole arbitrator replacing Mr. M. D. Dave, retired Judge, City Civil and Sessions Court, Ahmedabad to resolve the dispute between the parties with respect to LOA No. 157 dated 10-6-1994. Learned Arbitrator is requested to conclude arbitration proceedings and declare award at the earliest but not later than 9 (nine) months from the date of first sitting and first sitting shall be within a period of 1 (one) month from receipt of present order. Present application is allowed accordingly, in the facts and circumstances, there shall be no order as to costs. Application allowed.