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2013 DIGILAW 1214 (RAJ)

Brahma Prakash Modi v. State of Rajasthan

2013-07-08

PREM SHANKER ASOPA

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JUDGMENT 1. - Heard counsel for the parties. 2. This is an arbitration application arising out of Clause 36 of the Agreement No. 5/2005-06 dated 31st May, 2005 (Annexure-2) wherein clause 23 of the Rajasthan Government Agreement has been adopted for resolution of the disputes and differences arisen between the parties. 3. Briefly, stated the facts of the case are that the applicant M/s. Braham Prakash Modi is a Partnership firm and Shri Kirodimal Modi is Partner of the firm who entered into an agreement with the non-applicants for construction of Dausa-Manoharpur Road NH-11A, Kms. 32.0 to 42.0 (Job No. 011-A-RJ-2005-377) vide work order No. 965 dated 18.05.2005. The aforesaid work was awarded for Rs. 11,29,56,613/-. The applicant executed and completed the work on 15.10.2006. Final bill of the work was prepared and paid on 15.01.2009. Final Bill of the applicant was prepared and paid but payment of the actual work executed as per site requirements and as per agreement conditions was not released. Less amount was paid to the applicant against the execution of the work which created disputes arising out of the signed agreement (Annexure-2) in between the parties. Clause No. 23 of the agreement is Arbitration Clause which provides for settlement of disputes by Empowered Standing Committee. The applicant requested respondents by application dated 20.1.2011 (Annexure-5) for referring the disputes to the Empowered Standing Committee and deposited prescribed 2% fees with the application. Non-applicants did not refer the dispute to the Empowered Standing Committee. Non-applicants did not release genuine payment of the applicant and withheld payment of Rs. 2,14,16,973/-. Therefore, this arbitration application has been filed for getting the independent Arbitrator appointed on the ground that the non-applicants have failed to refer the matter to the Empowered Standing Committed within the prescribed period of one month and also till filing of the present application on 2nd February, 2012 and further the applicant is entitled for appointment of independent Arbitrator. 4. The non-applicants have filed their reply raising objection therein that although the application has been submitted by the applicant but the cheque of Rupees One lakh was not appended to the application. Therefore, the application could not be processed and the applicant is not entitled for the reference to the Empowered Standing Committee on the aforesaid ground. Otherwise also, the application for arbitration is also not maintainable. 5. Therefore, the application could not be processed and the applicant is not entitled for the reference to the Empowered Standing Committee on the aforesaid ground. Otherwise also, the application for arbitration is also not maintainable. 5. The applicant has filed a rejoinder to the said reply mentioning therein that the when the applicant requested to the non-applicants for issuing copy of the letter along with the details which were entered in the Receipt Register at SI. No. 2901, 2902 and 2903 under the Right to Information Act, the office of the Public Information Officer has informed that the letters received and entered in the Receipt Register at SI. Nos. 2901, 2902 and 2903 are not available and the cheques have also not been received by the office. Out of the aforesaid entries in the Receipt Register, one is related to the present case, therefore, the applicant in the rejoinder has stated that when the letter (application) itself is not traceable, then how the cheque enclosed with the letter (application) can be traceable. 6. Submission of Mr. D.D. Sharma, counsel for the applicant is that the cheque number, amount and name of the bank has been specifically mentioned in the application and, therefore, even if for the sake of argument it is assumed that the cheque was not sent by the applicant then also it was the duty of the non-applicants to ask the applicant to pay the fee for reference within the prescribed period of 30 days or before filing of this arbitration application on 2nd February, 2012. Not-asking will be treated as that the non-applicants have received the cheque of the fee. Counsel for the applicant submits that the non-applicants could have asked the applicant to give a fresh cheque and there was no occasion for the non- applicants not to initiate the proceedings of reference for sending the matter to the Empowered Standing Committee which could not be treated as incomplete and this action of not initiating any kind of proceeding is not justified. In support of the aforesaid contention, counsel for the applicant has placed reliance on para no. 7 of the judgment of this Court in the case of Siya Ram Jajra (M/s.) v. State of Rajasthan & Others, 2008 (4) RLW 3617 (Raj.) . In support of the aforesaid contention, counsel for the applicant has placed reliance on para no. 7 of the judgment of this Court in the case of Siya Ram Jajra (M/s.) v. State of Rajasthan & Others, 2008 (4) RLW 3617 (Raj.) . He has also referred the judgment of this Court given in the similar circumstances in the case of M/s. Ram Gopal Panwar v. State of Raj. & Ors, S.B. Civil Arbitration No. 37/2010, decided on 21st July, 2011 wherein when the matter was not referred to the Empowered Standing Committee within the prescribed period of 30 days then the applicant therein had withdrawn the amount of fees and this Court placed reliance on the Division Bench judgment of this Court in the case of Chetan Construction Company v. State & Ors., 2005 (4) R.A.J. 438 decided on 1st December, 2004 , wherein after 30 days, the applicant has advised the bank to stop the payment of the amount of cheque which was annexed by the applicant. Counsel for the applicant further submits that after filing of the present application before this Court, the non-applicants have forfeited their right of reference. In support of the aforesaid submission, counsel for the applicant relied on the judgment in the case of Punj Lloyd Ltd. v. Petronet MHB Ltd., (2006) 2 SCC 638 . 7. Submission of counsel for the non-applicants is that the non-applicants have not received the cheques and in support of which he has produced the original Receipt Register and against the letters entered at SI. Nos. 2901, 2902 and 2903 there is specific mention against each of the aforesaid entry that the "cheque not received" which clearly establishes the fact that the applicant has not annexed the cheque, therefore, the applicant who has not annexed the cheque cannot be allowed to take any advantage of the aforesaid incomplete application which was not processed within 30 days and further the matter has not been referred to the Empowered Standing Committee till the date of filing of the present arbitration application i.e. on 2nd February, 2012. He also submitted that the Court should consider the conduct of the applicant which makes him dis-entitled for appointment of the Arbitrator. 8. He also submitted that the Court should consider the conduct of the applicant which makes him dis-entitled for appointment of the Arbitrator. 8. In paragraph No. (7) of the judgment of this Court in the case of Siya Ram Jajra (M/s.) (supra) and relevant page No. 2 and 3 of Ram Gopal Panwar v. State of Rajasthan, SB Civil Arbitration Application No. 37/2010, decided on 21.7.2011 (supra) this Court has observed as under:- "(7) In the instant case although the applicant made request through his Advocate for referring the matter to Standing Committee by sending a notice dated May 23, 2006 to the respondents, yet the respondents did not even choose to send reply to the notice. If the respondents treated the notice as application to the Officer-in-Charge under clause 23, then also the applicant could have been asked to deposit prescribed fee. The act of respondents in not taking any step even after receiving the notice from the appellant, shall only mean that the respondents have declined the request of applicant to refer the matter to Standing Committee. Since the matter was not Standing Committee. Since the matter was not referred to the Standing Committee within 30 days of the demand the right to file application under 1996 Act accrued to the applicant. In this view of the matter, I find no merit in the preliminary objection raised by the learned Additional Advocate General." On page No. 2 and 3 of Ram Gopal Panwar (supra), the relevant Paragraph No. 3 of the Division Bench Judgment passed on 1.12.2004 in "Chetan Construction Co. (supra), has been quoted. The relevant portion of page no. 2 of Ramgopal Panwar wherein the paragraph No. 3 Chetan Construction Co. has been considered is as follows "3..... After expiry of 30 days as provided under clause 23 of the agreement the petitioner sent a telegram dated 26.09.2002 (Ex. 6) holding that since the respondents have failed to appoint the arbitration committee under clause 23 within a period of 30 days, their right to appoint arbitration committee stood forfeited and advised the bankers to stop the payment of the amount of the cheque which was enclosed by the petitioner along with the notice dated 22.8.2002 (Ex. 6) holding that since the respondents have failed to appoint the arbitration committee under clause 23 within a period of 30 days, their right to appoint arbitration committee stood forfeited and advised the bankers to stop the payment of the amount of the cheque which was enclosed by the petitioner along with the notice dated 22.8.2002 (Ex. 4) which has been placed on record." Relevant portion of Page No. 3, (conclusion) of Ram Gopal Panwar v. State of Rajasthan (supra) is as follows "On consideration of the submissions of the parties along with the judgment cited (supra), I am of the view that withdrawal of the requisite fee on failure on the part of the non-applicants to refer the dispute to the Empowered Standing Committee will not debar him from filing the application for appointment of Arbitrator. The applicant is entitled for appointment of sole Arbitrator." (Emphasis supplied) 9. In paragraph No. 5 of the judgment of the Supreme Court delivered in the case of Punj Lloyd Ltd. v. Petronet MHB Ltd. (supra) by the Bench of the three learned Judges of the Supreme Court the law laid down by the Bench of the two learned Judges of the Supreme Court in the case of Datar Switchgears Ltd. v. Tata Finance Ltd., (2000) 8 SCC 151 of forfeiture of the right of the non-applicant to refer the case to the Empowered Standing Committee after filing of the arbitration application has been affirmed and the said Paragraph No. 5 of the Punj Lloyd Ltd. (supra) is as follows:- "5. Having heard the learned counsel for the parties, we are satisfied that the appeal deserves to be allowed. The learned counsel for the appellant has placed reliance on the law laid down by this Court in the case of Datar Switchgears Ltd. v. Tata Finance Ltd. (2000) 8 SCC 151 : SCC R 158 , para 19 wherein this Court has held as under:-"[S]o far as Section 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 Section 11, that would be sufficient. If the opposite party makes an appointment even after 30 days of the demand, but before the first party has moved the court under Section 11, that would be sufficient. In other words, in cases arising under Section 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 Section 11 seeking appointment of an arbitrator. Only then the right of the opposite party ceases." (Emphasis supplied) 10. I have gone through the record of the Arbitration Application and have further considered the rival submissions of counsel for the parties as well as the judgments cited by counsel for the applicant. 11. On consideration of the aforesaid judgments it is revealed that deposit of the requisite fee for appointment of Arbitrator becomes significant only when a notice is given by the non-applicants to deposit the same within the prescribed period of 30 days or before filing arbitration application in the High Court. Even if any notice is given after filing of the arbitration application then also it is of no significance as per the aforesaid judgments. 12. This Court under Section 11 of the Arbitration and Conciliation Act, 1996 cannot make a detailed enquiry with regard to the fact of receipt or non-receipt of the cheque which justify one party not to make a reference and another party not entitled for appointment of Arbitrator as per the oral rival submissions of both the parties, but this Court in the case of Siya Ram Jajra (supra) held that in such a situation even if the cheque was not received then the applicant could have been asked to deposit the fee but no such steps have been taken by the non-applicant in the present case. In another judgment of this Court in the case of M/s. Ram Gopal Panwar (supra) wherein the judgment of the Division Bench in the case of Chetan Construction Company (supra) has been followed, clearly reveals that even if the payment has been stopped, it will not make the applicant dis-entitled for appointment of Arbitrator which clearly reveal that it is the duty of the non-applicants to give reply to the applicant and point out the defect within the prescribed period of 30 days of the notice period or till the date of filing of the present arbitration application i.e. on 2nd February, 2012, which has not been done in the present case. Therefore, the non-applicants have forfeited their right of reference and the applicant is entitled for appointment of Arbitrator. 13. Accordingly, the arbitration application is allowed. I deem it proper to refer this case to Mr. Justice DC Dalela, Former Judge of this Court, resident of 4-Ka-45, Jawahar Nagar, Jaipur to decide the dispute arising out of the agreement as per the arbitration. All objections are open to be raised by the non-applicants before the aforesaid Sole Arbitrator. Fees and other terms and conditions of arbitration shall be settled by the Arbitrator as per the Arbitration Manual. A copy of this order be sent to the Arbitrator. Appeal Allowed. *******