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2010 DIGILAW 544 (PNJ)

Oasis Contractors And Consultants Pvt Limited v. Punjab State Agricultural Marketing Board

2010-01-21

MUKUL MUDGAL

body2010
Judgment MUKUL MUDGAL, J. 1. This petition has been filed by the petitioner under section 11 (6) of the Arbitration and Conciliation Act, 1996 (for short the Act), for appointment of a sole Arbitrator to adjudicate upon the disputes between the parties. 2. Clause 25-A of the agreement contains the Arbitration clause which reads as under:- "25. A. If any question, difference or objections whatsoever shall raise in any way connected with or arising out of this instrument of the meaning or operation of any part thereof or the right, duty or liabilities of either party than save in so far as the decision of any such matter is here in before provided for and has been so decided every such matter including whether its decision accordingly or whether contract should be terminated or has been rightly terminated and as regards rights and obligation of parties as the results of such termination shall be referred for arbitration of the Superintending Engineer of the Board or acting as such at the time of reference within 180 days viz six months from the date of making final payment to the contractor or when the contractor is not willing to receive the payment from the date registered notice is sent to him that his final bill is ready for payment and his decision shall be final and binding and where the matter involved a claim under or payment or recovery of deduction of money, only the amount if any awarded in such arbitration shall be recoverable money, in respect of the matter referred. If the matter is not referred to the arbitration within the specified period all the rights claims under the contract shall be deemed to have been forfeited and absolutely barred. Here insert the official designation of the officer to be appointed as arbitrator." 3. The case of the petitioner is founded on a plea that earlier an Arbitrator had been appointed as per the arbitration clause and proceedings were concluded on 25.5.2004. The Arbitrator did not have any hearing after that nor was any award made inspite of repeated reminders, for a period of three years. Thereafter, the Arbitrator was transferred and declined to decide the case owing to paucity of time vide his letter dated 5.3.2007. Accordingly, this application was moved to appoint a fresh Arbitrator in place of the earlier appointed Arbitrator. Thereafter, the Arbitrator was transferred and declined to decide the case owing to paucity of time vide his letter dated 5.3.2007. Accordingly, this application was moved to appoint a fresh Arbitrator in place of the earlier appointed Arbitrator. The present application before this Court was moved in this Court on 17.7.2007. 4. On the other hand, learned counsel for the respondents contended that present application is liable to be dismissed on the sole ground that erstwhile Arbitrator was reappointed on 13.8.2007 to Arbitration case No.69 of 2007 [3] adjudicate upon the dispute. 5. After hearing learned counsel for the parties and on going through the record, I am of the considered view that the respondents had lost the right to reappoint the erstwhile Arbitrator on 13.8.2007 because it is well established law that if an Arbitrator is not appointed within 30 days of invocation of arbitration clause and is appointed after an application under Sec.11 (6) of the Act is filed before the High court, the party losses his right to do so. This position of law has been laid down by the Honble Supreme Court in Datar Switchgears Ltd. Tata Finance Ltd. and another, JT 2000 (Suppl.2) SC 226, is as follows:- "19. So far as cases falling under Sec.11 (6) are concerned-such as the one before us-no time limit has been prescribed under the Act, whereas a period of 30 days has been prescribed under Sec.11 (4) and Section 11 (5) of the Act. In our view, therefore, so far as Sec.11 (6) is concerned, if one party demands the opposite party to appoint an arbitrator and the opposite party does not make an appointment within 30 days of the demand, the right to appointment does not get automatically forfeited after expiry of 30 days. If the opposite party makes an appointment even after 30 days of the demand, but before the first party has moved the Court under Sec.11, that would be sufficient. In other words, in cases arising under Sec.11 (6), if the opposite party has not made an appointment within 30 days of demand, the right to make appointment is not forfeited but continues, but an appointment has to be made before the former files application under Sec.11 seeking appointment of an arbitrator. Only then the right of the opposite party ceases. Only then the right of the opposite party ceases. We do not, therefore, agree with the observation in the above judgments that if the appointment is not made within 30 days of demand, the right to appoint an arbitrator under Sec.11 (6) is forfeited." 6. There is no dispute that application under Sec.11 (6) of the Act was filed in this Court on 17.7.2007 and the erstwhile Arbitrator was reappointed on 30.8.2007. Therefore, in view of the law laid down by the Honble Supreme Court in Datar Switch Gear Case (supra) the respondents had lost the right to appoint an Arbitrator as per the arbitration clause. In the present case, I also find that the said arbitrator had rendered Nil Award against the petitioner. Since the appointment of the Arbitrator was illegal, the award rendered by him would be open to question. However, this plea has to be taken before the concerned Court where award is pending adjudication. 7. In view of the facts narrated above, I am of the view that this application deserves to be allowed. Ordered accordingly. Justice kiran Anand Lall, a former Judge of this Court is appointed as a sole arbitrator to adjudicate upon the disputes between the parties. The parties shall appear before the Arbitrator on 2.3.2010 at 4.00 P. M. Or within a fortnight on an agreed date convenient to the parties. The respondents are directed to transfer the file containing pleadings and evidence to the newly appointed Arbitrator. The Arbitrator shall make an endaveour to render the award not later than six months from the date of first appearance of the parties. The Arbitrator shall fix her own fee. In the meanwhile, a photocopy of the record shall be transmitted to the Arbitrator and as and when proceedings challenging the award pending before the learned District Judge are over, the original record shall be transmitted to the Arbitrator. Petition stands disposed of.