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2010 DIGILAW 108 (BOM)

Tirath Engineers v. Union of India

2010-01-21

ANOOP V.MOHTA

body2010
Judgment 1. Both the parties have challenged the impugned award dated 23rd December, 2008 by invoking Section 34 of the Arbitration and Conciliation Act, 1996 (for short, “The Arbitration Act”), though the Arbitration proceedings based upon the agreement between the parties dated 1st December, 1987 commenced on 24th January 1996, under the old Arbitration Act of 1940. But, ultimately the award published on Arbp482.09 3 23rd December, 2008 by the umpire/ arbitrator. 2. The basic events are 3. On 27/08/1987, the Respondent had invited tenders for the work of construction of various structures in connection with providing facilities for ROH repairs to tank wagon with roller bearing in sick lines at Karachiya yard. The contract for said work was awarded to the Petitioner vide Acceptance letter bearing No. Dy.CE/S & C/92 dated 27/08/1987. The cost of the work was Rs.19,71,888.45/with completion period of 12 months i.e. 26/08/1988 from the date of letter of Acceptance. 4. On 01/12/1987, accordingly, Contract Agreement No. Dy.CE/CA/57 dated 01/12/1987, was entered into by and between the parties. 5. On 15/09/1987, accordingly, the Petitioner has mobilized adequate resources at site to commence the work. Since the Respondent has not issued all drawings to take up the work immediately the Petitioner had addressed a letter dated 15/09/1987, to the Respondents requesting the Respondents to issue all the drawings. 6. On 21/09/1987, the Petitioner again reminded the Respondents vide their letter dated 21/09/1987 to issue the drawings which have not been finalized by the Respondents till that date. 7. On 05/10/1987, the Petitioner started the work and had completed the excavation of building foundation by 05/10/1987. The Petitioner also Arbp482.09 requested the Respondents in letter dated 05/10/1987, for getting the line layout for the main column foundations to enable the Petitioner to take up the excavation of main columns foundation. The Petitioner also requested to the Respondents to get the lines also blocked to take up the further work of foundation on main columns. 8. On 06/10/2008, the Respondent had furnished some of the drawings pertaining to the work with their letter dated 06/10/2008 and again issued the revised drawing showing the foundation details of main column with their letter dated 19/10/1987. Thereafter, also the Respondents had issued the drawings to the Petitioner. 05/10/1987, the Respondent has abnormally delayed the issuing of the working drawings. 9. Thereafter, also the Respondents had issued the drawings to the Petitioner. 05/10/1987, the Respondent has abnormally delayed the issuing of the working drawings. 9. On 31/01/1990, since the original contract period expired on 26/08/1988, the Petitioner applied for extension of time subject the to Respondents approving revised rates due to delay and various breaches of contract committed by them. The contract was extended up to 31/01/1990. Ultimately, the contract was wrongfully taken away by the Respondent from the Petitioner on 02/01/1990. The Petitioner has carried out the work value of Rs. 16,34,044/(almost 85%). The various differences had arisen between the parties due to various issues like non issuance of contracted drawings which resulted in the work being prolonged, delay in removing High Tension lines from the work site which had given rise to dispute and differences between the parties, which Arbp482.09 5 has further given rise to invocation of Arbitration Clause by the Petitioner. 10. On 05/10/1991, the Petitioner has addressed a letter dated 05/010/1991 to the General Manager of Respondent requesting him to appoint the Arbitrator as contemplated in clause 64 of the General Conditions of Contract. Since the General Manager of the Respondent failed to appoint the Arbitrators in the matter the Petitioner filed a Arbitration Suit No. 1911 of 1992 in this Hon’ble High Court. The Hon’ble Court directed the Respondents to appoint the Arbitrators in the matter. 11. On 28/08/1996, accordingly, the General Manager appointed Shri M.S. Ekbote, the then Chief Track Engineer (HQ), Churchgate and Shri S.B. Kulkarni as Joint Arbitrators vide General Manager’s letter dated 28/08/1996. Thereafter, the Respondent had changed the Arbitrators many times and ultimately Smt. Rashmi Kapoor and Shri. J.C. Parihar were appointed and they nominated Shri Anirudh Jain as Umpire. 12. On 29/10/2004, thereafter, the Joint Arbitrators held various meetings in the matter but they had not published the Award and the Umpire declined to proceed in the matter, ultimately the Petitioner again approached this Hon’ble High Court, vide Application No. 52 of 2004 for removal of the Umpire and appointment of new Umpire. The Hon’ble Court disposed of the Application on 29/10/2004, directing the parties to appear before the Umpire and at the same time it directs the Joint Arbitrators to publish the Award within three months. Arbp482.09 13. On 26/02/2005, the Joint Arbitrators published their Award on 26/02/2005. 14. The Hon’ble Court disposed of the Application on 29/10/2004, directing the parties to appear before the Umpire and at the same time it directs the Joint Arbitrators to publish the Award within three months. Arbp482.09 13. On 26/02/2005, the Joint Arbitrators published their Award on 26/02/2005. 14. On 21/11/2005, the Petitioner filed an Arbitration Petition No. 324 of 2005 in this Hon’ble Court for setting aside the Award passed by the Joint Arbitrators Smt. Rashmi Kapoor and Shri J.C. Parihar. The Hon’ble Court vide its order dated 21/11/2005 disposed of the aforesaid Arbitration Petition by setting aside the said Award and directing Shri Anirudh Jain, the Umpire to take over the Arbitration Proceedings and make the Award as expeditiously as possible, in accordance with law. 15. On 23/12/2008, the Umpire has held various meetings and published the Award. Being aggrieved by the Award dated 23rd December, 2008, the Petitioner seeks to challenge the Award. 16. Hence this Petition. 17. The Respondent, Union of India has also filed the Petition under Section 34 of the Arbitration Act, along with Notice of Motion for condonation of delay by relying on the following paragraph. 18. The Award is challenged under Section 34 of the Arbitration Act, in view of the fact that the Respondents themselves have challenged the award dated 26/02/2005, passed in the Contract No. CE/CA/57 dated 01/12/1987 in Arbitration Petition No. 324 of 2005, wherein in Paragraph No. 9 of the said Petition, the Respondent made the following averments Arbp482.09 as: “The petitioners submit that the Arbitral Tribunal was constituted under the provisions of Arbitration Act, 1940 and the proceedings were conducted as per the provisions of the Arbitration Act, 1940. The petitioners submit that as per the clause 64 of the General Conditions of Contract, the modification/ enactments of the Arbitration Act, 1940 are applicable and as such the impugned award is challenged under the provisions of Arbitration and Conciliation Act, 1996.” 19. The said petition was disposed of by this Hon’ble High Court vide order dated 21/11/2005. In view of pendency of above Petition, under Section 34 of the Arbitration Act, on the fact that the award dated 23/12/2008 was received on 30/12/2008, therefore, the Petition is filed along with the Notice of Motion on 8th April, 2009. 20. The said petition was disposed of by this Hon’ble High Court vide order dated 21/11/2005. In view of pendency of above Petition, under Section 34 of the Arbitration Act, on the fact that the award dated 23/12/2008 was received on 30/12/2008, therefore, the Petition is filed along with the Notice of Motion on 8th April, 2009. 20. The Petition under Section 34 of the Arbitration Act is not maintainable against the impugned award which was basically passed by the Arbitrator empowered under the Old Act of 1940, as the parties throughout participated before the Arbitrator and the Arbitrator also proceeded as per the old Act. Admittedly, the Arbitration Proceeding commenced on 24th January, 1996. 21. This is in view of the clear provision of Section 85 of the Arbitration Arbp482.09 Act, 1996 which is reproduced as under“ S. 85. Repeal and saving. (1) The Arbitration (Protocol and Convention) Act, 1937 (6 of 1937), the Arbitration Act, 1940 (10 of 1940) and the Foreign Awards (Recognition and Enforcement) Act, 1961 (45 of 1961) are hereby repealed. (2) Notwithstanding such repeal,( a) the provisions of the said enactments shall apply in relation to arbitral proceedings which commenced before this Act came into force unless otherwise agreed by the parties but this Act shall apply in relation to arbitral proceedings which commenced on or after this Act comes into force.” 22. Section 85(2) (a) corresponds to Section 48 of the Arbitration Act of 1940 and Section 84(1) of the English Arbitration Act, 1996. 23. It is clear from the above provisions that the Arbitration Act, 1940 shall continue to apply to the Arbitration Proceedings which commenced after invocation of the Arbitration agreement between the parties prior to 24th January, 1996. In the present case, there is nothing to show that the parties have agreed to be governed by the Arbitration Act, 1996 at any point of time. (State of Goa Vs. Chinna Nachimuthu Constructions, 2008(3), Arb. L.R. 220 (Bom) DB. (2) Radhey Shyam Assoc. Vs. State of Maharashtra, 2008 (3) Arb. LR 216 (Bom). (3) Gammon India Ltd. Vs. Sheth Estate Development Pvt. Ltd., 2006 (2) Arb. L.R. 194 (Guj.) (D.B.) (4) DDA V. S. Kumar, 2008 (3) Arb. L.R. 290 (Del) (DB). 24. The Apex Court in Thyssen Stahlunion GMBH Vs. Steel Authority Arbp482.09 of India Ltd., (1999) 9 S.C.C. 334 , referring to the earlier Judgment of Shetty’s Constructions Co. (3) Gammon India Ltd. Vs. Sheth Estate Development Pvt. Ltd., 2006 (2) Arb. L.R. 194 (Guj.) (D.B.) (4) DDA V. S. Kumar, 2008 (3) Arb. L.R. 290 (Del) (DB). 24. The Apex Court in Thyssen Stahlunion GMBH Vs. Steel Authority Arbp482.09 of India Ltd., (1999) 9 S.C.C. 334 , referring to the earlier Judgment of Shetty’s Constructions Co. (P) Ltd. Vs. Konkan Rly. Construction, (1998) 5 S.C.C. 599 , reiterated that when the Arbitration Proceeding commenced before the Arbitration and Conciliation Act, 1996, which came into force on 25th January, 1996, would be enforced under the provisions of the Arbitration Act, 1940. As at the time of commencement of Arbitration proceedings, in the present case, the old Act was enforced. Even after the commencement of the new Act, the parties never agreed to be governed by the new Act. On the contrary, the parties and the Arbitrators proceeded on the basis of old Act. 25. Section 14 of the Old Act provides for the award to be signed and filed. Both the Acts are comparatively different on this aspects. The challenge to the award and/or the enforcement of the award would be governed by the old Act, only. 26. The orders, even if any, passed by the Court in the present proceedings as referred above, it cannot be read to mean that after 1996, in an Arbitration proceedings which commenced on the basis of old Act, is now required to be proceeded with or governed by the new Act, specially when the provisions of the old Act, in the present facts and circumstances and in view of Section 85 of the Arbitration Act, 1996 itself, is governed by the old Act, (Niraj Munjal Vs. Atul Grover, (2005) 5 S.C.C. 404 .) 27. In view of above, in my view, the Arbitration Petitions as filed by Arbp482.09 invoking Section 34 of the Arbitration Act, 1996 challenging the award dated 23rd December, 2008, in the present facts and circumstances are not maintainable. The remedy is elsewhere. 28. Resultantly, the Arbitration Petition No. 482 of 2009, as well as, Arbitration Petition (L) No. 345 of 2009 and the Notice of Motion No. 1574 of 2009 filed by the Union of India, against the same award dated 23rd December, 2008, is also not maintainable, therefore, dismissed. No order as to costs.