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2011 DIGILAW 456 (JK)

Bhatia Builders and Contractors, Engineers, Builders, Suppliers and Transporters, 33-D/C, Gandhi Nagar, Jammu through its Sole Proprietor, Shri Haris v. State of Jammu & Kashmir and others

2011-08-30

VIRENDER SINGH

body2011
This order will dispose of the aforesaid two arbitration petitions bearing A.A. Nos.10/2011 & 11/2011 involving one and the same issue on facts as well as law. M/s Bhatia Builders and Contractors, Engineers, Builders, Suppliers and Transporters through its Sole Proprietor, Shri Harish Chander Bhatia (for short to be referred to as 'the petitioner') through the present two petitions is seeking assistance of this Court in taking the evidence before the Arbitral Tribunal (for short 'Tribunal') in terms of Section 27 of J&K Arbitration & Conciliation Act, 1997 (for short 'the Act'). The circumstances which necessitated the petitioner to move the present petitions are depicted herein below. The petitioner entered into two different Contract Agreements with the respondents one bearing No.AG-46 of 02/2006 followed by supplementary Agreement No.AG-191 of March, 2008 and another bearing No.AG-08 of 10/2005 followed by supplementary Agreement No.AG-20 of August, 2007 executed on two different dates. These agreements were with regard to the constructions of flats of a particular type in two different groups/blocks. The case of the petitioner is that the work was completed as per the agreement within the stipulated period, the total value of which was Rs.9,61,35,193/-(Rs.5,10,89,661/- plus Rs.4,50,45,532/-). Despite completion of the work, when the respondents did not make the payment for more than 1 ½ year, he was constrained to serve notice on respondents in November, 2009 invoking clause 27 of the Contract Agreement for reference of dispute to the Tribunal, which was not responded to by the respondents. The petitioner then filed a petition in this Court under Section 11(6) of the Act for appointment of an Arbitrator with regard to both the contracts, in which the respondents despite seeking number of opportunities, did not file objections. Ultimately, this Court vide order dated 21.10.2010 appointed Hon'ble Mr. Justice Y. P. Nargotra (Retired) as Sole Arbitrator in this case. The Tribunal entered into the reference on 29.11.2010 and issued notices to the respondents for appearance. On 12.02.2011, one Shri Girdhari Lal, AEE representing the respondents sought time for filing reply/counter claim. Since the petitioner had deposited half of the share of the Arbitration Fee beside the amount towards Secretariat expenses fixed by this Court, the respondents were also directed to deposit their share of Arbitration Fee fixed by this Court. On 12.02.2011, one Shri Girdhari Lal, AEE representing the respondents sought time for filing reply/counter claim. Since the petitioner had deposited half of the share of the Arbitration Fee beside the amount towards Secretariat expenses fixed by this Court, the respondents were also directed to deposit their share of Arbitration Fee fixed by this Court. Record reveals that respondents sought another opportunity for filing reply/counter claim, which prayer was acceded to, but as last and final opportunity. On the next date of hearing, another opportunity was sought by the respondents, which was opposed by the petitioner, but the Tribunal in the interest of justice granted yet another opportunity for the same. It is thereafter only, the respondents filed their reply. Both the parties were also directed to file their additional documents on which they wanted to rely. After the rejoinder was filed by the petitioner, aforesaid Girdhari Lal, AEE who was representing the respondents was directed to produce Measurement Book(s), R.A. Bills and Work Register(s) pertaining to the work in question on the next date of hearing. The case was, thus, fixed for preliminary hearing. At this stage, the respondents put in their appearance through Mr. Y. P. Koushal, Advocate and one Rakesh Nargotra, Legal Assistant. Learned counsel for the respondents sought four days' time for production of records, which was granted. Instead of producing the record, learned counsel for the respondents moved Civil Miscellaneous Petition questioning the jurisdiction of the Tribunal to which the petitioner filed objections. Since the respondents had not deposited their share of Arbitration Fee, they were once again directed to deposit the same. However, learned counsel for the respondents refused to deposit the same. It would be apt to reproduce the proceedings before the Tribunal in this regard:- “ Mr. Kousal, learned Counsel for the respondents has moved a Letter of Challenge-CMP for questioning the jurisdiction of the Arbitrator. Copy of the same has been furnished to Mr. Gupta, learned counsel for the petitioners. Mr. Gupta may file objections by the next date of hearing. On the next date of hearing, learned Counsel for the respondents shall deposit their part of fee of the Arbitrator, failing which appropriate orders shall follow. No records as directed vide orders dated 23-4-2011 and 7-5-2-11 has been produced by the respondents. Put up on May 21, 2011, at 5 PM for hearing arguments on the CMP. On the next date of hearing, learned Counsel for the respondents shall deposit their part of fee of the Arbitrator, failing which appropriate orders shall follow. No records as directed vide orders dated 23-4-2011 and 7-5-2-11 has been produced by the respondents. Put up on May 21, 2011, at 5 PM for hearing arguments on the CMP. At this stage, learned Counsel for the respondents Mr. Koushal makes a statement that since the challenge to the jurisdiction of the Arbitrator has been made, therefore, the respondents shall not deposit their part of the fee of the Arbitrator. This issue shall also be taken up for consideration on the next date of hearing.” Application questioning the jurisdiction of the Arbitrator was ultimately dismissed by the Tribunal on 27.05.2011, copy thereof forms part of the record. Since learned counsel for the respondents has reiterated the stand that he would not pay the share of Arbitration Fee, the petitioner was put to an option to pay the share of arbitration costs payable by the respondents in terms of proviso (1) to Sub-section (2) of Section 38 of the Act of 1997, for which the petitioner sought some time. On the next date of hearing, the arbitral costs was deposited by the petitioner and sought time to suitably amend the claims in order to add the claims pertaining to the arbitral costs, which was granted. Learned counsel appearing for the respondents was once again directed to produce aforesaid records i.e. Measurement Book(s), R.A. Bills and Work Register(s) pertaining to the work in question in terms of the earlier order. Despite availing opportunities to produce aforesaid records, learned counsel for the respondents on 14.06.2011 made a statement before the Tribunal that the respondents will not produce the record unless it is specifically directed by the Court. For facility of reference, order dated 14.06.2011 reads thus:- “ Mr. Gupta has filed the amended claim, the copy of which has been furnished to Mr. Koushal who has instantly filed his reply thereto. As regards the direction dated 23-4-2011, directing the respondents to produce the record (Measurement Book(s), R.A. Bill and work registers) the respondent despite various opportunities granted have not produced the record. Today Mr. Koushal Ld. Gupta has filed the amended claim, the copy of which has been furnished to Mr. Koushal who has instantly filed his reply thereto. As regards the direction dated 23-4-2011, directing the respondents to produce the record (Measurement Book(s), R.A. Bill and work registers) the respondent despite various opportunities granted have not produced the record. Today Mr. Koushal Ld. Advocate representing the respondents has made the statement that the respondents shall not produce the record unless it is specifically directed by the Court and shall not produce the same in compliance to the direction issued by this arbitral Tribunal. Mr. Gupta seeks an opportunity for producing the record. Mr. Gupta is permitted to file the record on the next date of hearing while Mr. Koushal is informed that his refusal to produce the record as per the direction of this Tribunal may entail legal consequences to be decided later. Now the file shall come up for preliminary hearing on merits of the claims on 8th of July, 2011 at 5 PM.” The other two orders passed after 14.06.2011 by the Tribunal also need to be reproduced. Those read:- “08.07.2011 Mr. Bhatia, petitioner seeks time for production of the Records in terms of the previous order. Mr. Koushal, learned Counsel for the respondents is opposing the prayer on the ground that the adjournment of the case would not be justified. I am not in agreement with Mr. Koushal. Looking at the opportunities and adjournments availed by the respondents during the proceedings conducted so far, the adjournment sought by Mr. Bhatia cannot be said to be un-justified. He is granted time for producing the records on the next date of hearing.” “15.07.2011 Mr. R. K. Gupta, learned Senior Counsel for the petitioner has produced the Photostat copies of the record, which according to him is all what was available with the petitioner. The Photostat copies of the record produced is taken on record of the case. One set of copies has also been furnished to Mr. Y. P. Koushal, learned counsel for the respondents. Mr. Gupta, learned Counsel for the petitioner seeks two weeks' time for adopting appropriate recourse in regard to the production of complete original record and evidence. The Photostat copies of the record produced is taken on record of the case. One set of copies has also been furnished to Mr. Y. P. Koushal, learned counsel for the respondents. Mr. Gupta, learned Counsel for the petitioner seeks two weeks' time for adopting appropriate recourse in regard to the production of complete original record and evidence. Permission as prayed for is granted.” It is under these circumstances, the petitioner has moved the present two applications, which were taken up by this Court on 22.07.2011 and adjourned at the request of learned counsel for the petitioner enabling him to place on record the Approval of the Tribunal in terms of Section 27 of the Act of 1997, which stands granted by the Tribunal on 30.07.2011, copy thereof is also placed on record. In this factual backdrop, these two applications are now before this Court for consideration. Record reveals that on 02.08.2011, notice was issued to the respondents. Mr. Y. P. Kaushal, Advocate, who was on caveat has accepted the notice. He has responded to the same by filing reply. Heard learned counsel for both the sides and gone through the record. While referring to the different orders available on record with regard to the Arbitral proceedings, Mr. Gupta submits that, in fact, the respondents are intentionally delaying the arbitration proceedings for one reason or the other, in turn, it defeats the very object of the Act. He submits that right from the very beginning, the intention of the respondents is not fair and are dragging the petitioner unnecessarily, who when not made the payment for a considerably long period, was constrained to move an application in this Court for appointment of the Arbitrator, in which also the respondents showed non-cooperative attitude and ultimately Arbitrator was appointed. He submits that when the Tribunal entered into the reference and thought of wrapping up the arbitral proceedings at the earliest, as is the intent of the legislature, the respondents started taking one excuse or the other inasmuch as even the arbitral costs falling into their share was not deposited, which was ultimately deposited by the petitioner from his own pocket, which resulted into an amendment of the claim. Thereafter also, another excuse was taken for not producing the record so that the proceedings are delayed further. Mr. Thereafter also, another excuse was taken for not producing the record so that the proceedings are delayed further. Mr. Gupta would contend that the original records directed to be produced are in possession of the respondents only, which justify the claims of the petitioner and the petitioner can not be expected to produce the same. The respondents are unfair in not producing the same before the Arbitrator. He submits that the details of those documents, which are four in numbers, are already given in para 17 of the applications and are very important for the just decision of the arbitration proceedings as from these documents only, the petitioner can project and prove the exact amount of work having been executed at the site and the payments made in lieu thereof by the respondents from time to time. Mr. Gupta then contends that may be the petitioner had sought time to produce whatever record was available with him and also produced the phot-stat copies of the Running Account Bills, Final Bill and certain other documents, which were also taken on record, as is reflected in the proceedings before the learned Tribunal, yet production of the original documents would facilitate the Tribunal to take a just decision. This record can be brought before the Tribunal by summoning the official(s) of the office concerned. According to him, even the officials of the Relief Organisation, Jammu, who were directly connected with the execution of the work, preparation of Measurement Books, Running Account Bills and also the Final Bills are also required to be summoned as witnesses, complete particulars thereof are also given in these applications. Mr. Gupta submits that had the respondents produced the aforesaid documents before the Tribunal as directed and admitted the entries made therein, perhaps the situation for summoning the witnesses would have not arisen. The negative attitude adopted in this case has constrained the petitioner to knock at the door of this Court to seek assistance in taking the required evidence in terms of Section 27 of the Act. Per contra, Mr. The negative attitude adopted in this case has constrained the petitioner to knock at the door of this Court to seek assistance in taking the required evidence in terms of Section 27 of the Act. Per contra, Mr. Kaushal submits that he has already filed reply to the amended claims before the Tribunal taking certain objections, in which he has questioned the order dated 27.05.2011, whereby the petitioner was put to an option to pay the share of arbitral costs in terms of proviso (1) to Sub-section (2) of Section 38 and till those objections are decided by the learned Tribunal, the instant applications may not be decided finally. He has placed on record the reply to the amended claims. Mr. Kaushal then submits that the instant two applications have been filed to defeat the sole object of the Act. The applications lack bona fide and, therefore, deserve to be rejected out rightly. According to him, Section 27 is required to be read with Section 23 of the Act, which deals with the statements of claim and defence. He submits that in the present case, admittedly, the petitioner on the very first day i.e. 29.11.2010 had put up his claim before the Tribunal. The petitioner could submit with its statement/claims, all documents it considered to be relevant or could add a reference to the documents or other evidence, which it wanted to submit subsequently and not by forcing the respondents to produce the documents at the whims of the petitioner. Therefore, the respondents have rightly refused to produce the documents, may be they are in their possession. The learned counsel submits that the procedure adopted is not in consonance with the Act. Section 19 contained in Chapter V of the Act deals with determination of rules of procedure. It reads thus:- “19. Determination of rules of procedure (1) The arbitral tribunal shall not be bound by the Code of Civil Procedure, Samvat 1977 or the Evidence Act, Samvat 1977. (2) Subject to this Part, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings. (3) Failing any agreement referred to in sub-section (2), the arbitral tribunal may, subject to this Part, conduct the proceedings in the manner it considers appropriate. (2) Subject to this Part, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings. (3) Failing any agreement referred to in sub-section (2), the arbitral tribunal may, subject to this Part, conduct the proceedings in the manner it considers appropriate. (4) The power of the arbitral tribunal under sub-section (3) includes the power to determine the admissibility, relevance, materiality and weight of any evidence. Bare perusal of Section 19 makes it very clear that the arbitral tribunal is not bound by the Code of Civil Procedure, Samvat 1977 or the Evidence Act, Samvat 1977 and in terms of sub-section (2) of Section 19, the parties are free to agree on the procedure to be followed in conducting the arbitral proceedings before the Tribunal. However, if there is no agreement between the parties for conducting the proceedings before the Tribunal as contained in sub-section (2), the arbitral tribunal in terms of sub-section (3) may conduct the proceedings in the manner it considers appropriate. Therefore, once the Tribunal takes resort to sub-section (3), it is within its competence to determine the admissibility, relevance, materiality and weight of any evidence as is clear from sub-section (4) of Section 19. In the case at hand, the Tribunal entered into the reference on 29.11.2010, the first day when the petitioner had appeared before it through counsel and presented the copy of the order dated 21.10.1010 passed by this Court appointing him as sole Arbitrator for adjudication and settlement of the disputes which had risen between the parties. On the next date itself, after receipt of notice, one Girdhari Lal, AEE representing the respondents had put in appearance and sought time to file reply/counter claim. One can make out from the record that the Tribunal started conducting the proceedings in the manner it considered appropriate, to which none of the parties raised any objection at that stage. Perusal of the record would further indicate that after the reply was filed by the respondents and the petitioner was asked to file rejoinder, both the parties were given an opportunity to file additional document(s), if any, on which they wanted to rely and for this purpose also a date was fixed i.e. 23.04.2011. Perusal of the record would further indicate that after the reply was filed by the respondents and the petitioner was asked to file rejoinder, both the parties were given an opportunity to file additional document(s), if any, on which they wanted to rely and for this purpose also a date was fixed i.e. 23.04.2011. On this date, aforesaid Girdhari Lal, AEE Technical Officer was directed to produce Measurement Book(s), R.A. Bills and Work Register(s) pertaining to the work in question on the next date of hearing. It is worth mentioning here that some original documents produced by Girdhari Lal on behalf of respondents were also taken on record. May be the concerned official of the respondents was directed to produce the aforesaid documents on the request of the petitioner or otherwise, the Tribunal thought the necessity of perusing those documents. The procedure adopted by the Tribunal, thus, cannot be questioned now as both the parties had submitted themselves before the Tribunal to conduct the proceedings in the manner it considered appropriate. Therefore, the argument advanced by Mr. Kaushal that provisions of Section 23 are attracted in this case, deserves to be rejected. Even otherwise, Section 27 of the Act is independent of Section 23 of the Act. The purport of these two sections is also different. The next argument advanced by Mr. Kaushal that till the objections filed by him questioning the order dated 27.05.2011 with regard to an option to the petitioner to pay the share of Arbitral costs are considered by the Arbitral Tribunal, the instant two applications be kept pending, deserves to be rejected out rightly. If the Tribunal finds any substance in those objections, it would call for an appropriate order at the appropriate stage. That has got no relevance with the controversy at hand. Another fact, which is worth noticing herein, is that after a specific direction was issued to the official of the respondents to produce the aforesaid documents, on the next date i.e. 07.05.2011, Mr. Kaushal appearing for the respondents sought four days' time for production of the aforesaid record without raising any objection to the said direction. Another fact, which is worth noticing herein, is that after a specific direction was issued to the official of the respondents to produce the aforesaid documents, on the next date i.e. 07.05.2011, Mr. Kaushal appearing for the respondents sought four days' time for production of the aforesaid record without raising any objection to the said direction. Instead of complying with the direction of the Tribunal, he moved some miscellaneous application challenging the jurisdiction of the Tribunal and even refused to deposit the arbitral costs falling to their share, which stand was again reiterated despite the application questioning the jurisdiction of the tribunal was dismissed by the Tribunal. Even after that, the respondents were once again directed to produce the aforesaid record in terms of the earlier order dated 23.04.2011 and ultimately a categoric statement was made by Mr. Kaushal on 14.06.2011 that he would not produce the record in compliance of the direction of the Tribunal and unless specifically directed by the Court. In fact, Section 27 of the Act meets such like situation before the Tribunal in conducting its proceedings where Court assistance is required. It would be apt to reproduce Section 27 of the Act. It reads thus:- “27. Court assistance in taking evidence (1) The arbitral tribunal or a party with the approval of the arbitral tribunal may apply to the Court for assistance in taking evidence. (2) The application shall specify- (a) the names and addresses of the parties and the arbitrators; (b) the general nature of the claim and the relief sought; (c ) the evidence to be obtained, in particular.- (i) the name and address of any person to be heard as witness or expert witness and a statement of the subject-matter of the testimony required; (ii) the description of any document to be produced or property to be inspected. (3) The Court may, within its competence and according to its rules on taking evidence execute the request by ordering that the evidence be provided directly to the arbitral tribunal. (4) The Court may, while making an order under sub-section (3), issue the same processes to witnesses as it may issue in suits tried before it. (3) The Court may, within its competence and according to its rules on taking evidence execute the request by ordering that the evidence be provided directly to the arbitral tribunal. (4) The Court may, while making an order under sub-section (3), issue the same processes to witnesses as it may issue in suits tried before it. (5) Persons failing to attend in accordance with such process, or making any other default, or refusing to give their evidence, or guilty of any contempt to the arbitral tribunal during the conduct of arbitral proceedings, shall be subject to the like disadvantages, penalties and punishments by order of the Court on the representation of the arbitral tribunal as they would incur for the like offences in suits before the Court. (6) In this section the expression “Processes” includes summons, and commissions for the examination of witnesses and summons to produce documents.” Sub-section (1) of Section 27 deals with two situations viz., first that the Tribunal itself can apply to the Court for seeking assistance in taking evidence whenever he feels the necessity of obtaining the evidence; and second eventuality is that either of the parties with the approval of the Tribunal may apply to the Court for assistance in taking the evidence. In the case at hand, the second option is being sought to be availed. What is more relevant is that in terms of sub-section (4), the Court can issue the same process to witness as is applicable in trying a suit. Suit means 'a civil suit'. Therefore, we will have to advert to Order XVI of Code of Civil Procedure relating to summoning and attendance of witness. Order XVI Rule 6 deals with summons to produce document, whereas Rule 7 deals with power of the Court to require persons present in the Court to give evidence or produce document. Rules 10, 11 & 12 deal with the procedure where the witness fails to comply with summons or appear. Sub-section (5) of Section 27 of the Act also deals with the default clause and the Court on the representation of the Tribunal can impose penalties and punishments as would incur for the like offences in the suits before the Court. Rules 10, 11 & 12 deal with the procedure where the witness fails to comply with summons or appear. Sub-section (5) of Section 27 of the Act also deals with the default clause and the Court on the representation of the Tribunal can impose penalties and punishments as would incur for the like offences in the suits before the Court. Conjoint reading of sub-sections (4) & (5) of Section 27 makes it clear that for the purpose of securing the presence of witness to give evidence or to produce document, which in his possession, the procedure as contained in Order XVI relating to summons and attendance of witness shall be adhered to. Therefore, the present two applications are required to be disposed of in that manner only. As stated above, the respondents have adopted insolent attitude throughout the Arbitral proceedings. It is not appreciable, in particular, when State or any Govt. Organization is the party. Admittedly, the original documents are in their possession, yet they are shirking to produce the same. The petitioner possibly can not be in possession of the original record relating to construction in dispute, as such, the Tribunal rightly felt the necessity of perusing the same to settle the claims of the parties. On refusal, whatever was in possession of the petitioner, was produced before the Tribunal. This all speaks of bona fides on the part of the petitioner at least who is sincerely assisting in the Arbitral proceedings. In the given circumstances, the petitioner is left with no option except to move this Court for seeking assistance under Section 27 of the Act. Therefore, in my considered view, both these applications deserve to be allowed. Ordered accordingly. Resultantly, the respondents are directed to produce the following original documents (already referred to in para 7 of the applications) before the arbitral tribunal:- a) R.A. (Running Account) Bills No.1 to 17. b) Final Bill. c) Works Register. d) All Measurement Books pertaining to the work in question. The petitioner is also permitted to procure the attendance of following officials (already referred to in para 18 of the applications) before the arbitral tribunal on furnishing requisites with the Registrar Judicial of this Court:- i) Opinder Sus, the then Junior Engineer, Relief Organization, Jammu, presently posted at State PWD. ii) Girdhari Lal, AEE (presently posted as Technical Officer to Relief Organization, Jammu). ii) Girdhari Lal, AEE (presently posted as Technical Officer to Relief Organization, Jammu). iii) Anoop Koul, the then Executive Engineer, presently posted as Chief Engineer, SKAUST, Jammu. The process shall be issued only after a particular date is fixed by the Tribunal as per its convenience, for which purpose, both the parties with their respective counsel shall appear before the Tribunal on 03.09.2011. Should the witness(s) fail to appear before the Tribunal despite being served, the petitioner shall be at liberty to seek the assistance of this Court once again for initiating appropriate proceedings against the defaulting official(s) under sub-section (5) of Section 27 of the Act. Before parting with this order, I must record my displeasure over the manner, the State/respondent has acted in the Arbitration proceedings pending before the Tribunal. Settlement of the disputes through Arbitral process is an effective and expeditious mode in the Alternate Dispute Redressal Mechanism in which each party to the dispute is expected to project and disclose its stand fairly and objectively for assisting the Tribunal to reach his conclusion as early as possible, rather than adopting an attitude of an impertinent litigant who is interested in delaying the proceedings of the case simply for prolonging the agony of the other party as appears to have happened in this case. Bare perusal of the interim orders referred to hereinabove exhibits uncalled for adamancy on the part of State/its functionaries in not producing the relevant record pertaining to the case admittedly in their possession. With these observations, the instant two applications shall stand disposed of. Registry to send copy of the order to 1) Commissioner-cum-Secretary, Revenue Department, J&K Government, Civil Secretariat, Srinagar, 2) Relief Commissioner (Migrants) Jammu, Govt. of J&K, Jammu, and 3) Arbitrator. Registrar Judicial to take note of it.