Research › Search › Judgment

Rajasthan High Court · body

2013 DIGILAW 1997 (RAJ)

Mahendra Singh v. State of Rajasthan

2013-11-12

GOVIND MATHUR

body2013
JUDGMENT Hon'ble MATHUR, J.—The applicant a partnership firm registered as "AA" Class Contractor, undertook a work from respondent State on contract for "widening of (SHW-6) Bikaner-Delhi Road (3.60M to 7.00M) Km 120/0 to 132/0. 152/0 to 160/0 (20 kms) (Job No.CRF-538-RJ-2007)". The work order dated 19.5.2007 was issued in favour of the applicant with condition to complete the work assigned upto 28.11.2007. As per the applicant the payment of work done was not made, therefore, some delay occurred in completion of the project, but the term was extended by the respondents from time to time. While undertaking the work in extended period a letter from respondent No.2 was received by the applicant withdrawing the work. A dispute as such arisen between the parties, thus, a notice dated 31.8.2009 was served upon the respondents for making a reference of the dispute to the standing committee as per clause 23 of the argument. On being not making reference, the applicant preferred this application for appointment of independent arbitrator to adjudicate the dispute existing between the parties. The application was filed on 3.10.2009. 2. A reply to the application was filed by the respondents on 18.1.2011 stating therein that the applicant failed to commence work as per work order dated 19.5.2007, therefore, no payment was outstanding and whatever delay caused was due to applicant. As per the respondents notices were also given to the applicant to take immediate steps to have necessary progress in the work, but of no consequence. In reply to the application nothing is stated about referring the issue for adjudication to the standing committee as per clause 23 of the agreement. 3. An additional affidavit sworn-in by Shri Ganesh Ram, Executive Engineer, Public Works Department Division, Sardarsahar was subsequently filed on 3.2.2011 with a statement that as a matter of fact the dispute was referred to the standing committee and the standing committee has already answered he same under the award dated 23.11.2010, as such the instant application has become infructuous. 4. While meeting with the arguments advanced, learned counsel for the applicant urged that the dispute was not referred for its adjudication to the standing committee within the period of one month from the date of receipt of notice dated 31.8.2009, therefore, the reference made subsequent thereto is absolutely non-consequential. The respondents were having no authority to make such reference after lapse of the period stipulated. The respondents were having no authority to make such reference after lapse of the period stipulated. It is asserted that the award said to be passed on 23.11.2010 is absolutely without jurisdiction. Learned counsel for the applicant has also pointed out that no information was given to the applicant for making such reference upto 26.7.2010. A notice was certainly served upon the applicant to participate in arbitral proceedings, but in response to that it was conveyed to the respondents that no reference could have been made after the lapse of a period of one month from he date of receiving notice. The reference made, thus, is not valid. As per learned counsel the applicant did not participate in the proceeding before the committee concerned. It is also pointed out that in the award dated 23.11.2010, i.e. placed on record as Anx.R/6, the presence of representative of the applicant has been erroneously shown. 5. In the backdrop noticed above, this Court on 15.2.2013 directed the respondents to make available the entire record of the standing committee, accordingly the same is made available for perusal of the court today. It reveals therefrom that only one notice was served upon the applicant and the applicant immediately responded the same with assertion that the reference made is not competent, being made beyond a period of one month from the date of receiving notice and even after filing the application under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act of 1996"). A perusal of the record further discloses that the reference was made even after receiving notice of the instant application. 6. Hon'ble Supreme Court in Deep Trading Co. (M/s.) vs. M/s. Indian Oil Corporation, reported in 2013 DNJ (SC) 378, held that if appointment of arbitrator is made during pendency of the proceedings under Section 11(6) of the Act of 1996, then such reference is of no consequence and that does not disentitle a party to seek appointment of th3e arbitrator by the Chief Justice as per Section 11(6). 7. In the case in hand it is not in dispute that the reference was made to the standing committee during pendency of the proceedings as per Section 11(6) of the Act of 1996. 7. In the case in hand it is not in dispute that the reference was made to the standing committee during pendency of the proceedings as per Section 11(6) of the Act of 1996. The fact about filing of the application for appointment of an independent arbitrator by the applicant before this Court was also in knowledge of the respondents. The respondents in spite of it choose to refer the matter to the standing committee. It is also pertinent to note that no averment about making such reference and passing of award by the standing committee on 23.11.2010 was made by the respondents in reply to the application, which was filed on 3.2.2011. 8. Looking to the factual position mentioned above and also the law settled by Hon'ble Apex Court in M/s. Deep Trading Co. (supra), I am of the view that the reference made by the respondents in no manner disentitles the applicant from getting an independent arbitrator appointed in accordance with Section 11(6) of the Act of 1996. The applicant is right in saying that the reference made was lacking competence. 9. The next issue deserves consideration is that whether passing of the award dated 23.11.2010 makes this application infructuous? 10. As already stated, the reference to the standing committee was made by the respondents after receiving notice of this application and the applicant immediately objected for the same. The applicant also refused to participate in the proceedings by taking a specific stand that the matter was pending consideration before the Hon'ble High Court. the standing committee despite of it chose to proceed with arbitral proceedings, and while doing so, further issued noticed to the applicant. As per the record made available, the notices so issued were not served upon the applicant. 11. Be that as it may, as already held that the applicant was having right to claim for appointment of arbitrator on being failed to have reference of the dispute within a period of one month from he date of receiving the notice and the respondents forfeited their right to refer the dispute after the lapse of the period concerned, this Court is of the view that the proceedings undertaken by the standing committee are absolutely incompetent and non-consequential. This view of the Court is founded on the judgment of Hon'ble Supreme Court in Dharma Prathishthanam vs. Madhok Construction Pvt. Ltd., reported in 2004(3) ALR 432 (SC). In the case aforesaid Hon'ble Supreme Court while dealing with an issue under Arbitration Act, 1940, held that failure to give consent or to appoint an Arbitrator in response to a notice for appointment of an Arbitrator given by the other party provides justification to the other party for taking action under sub-section (2) of Section 8 of the Act and then it is the High Court which assumes jurisdiction to appoint an Arbitrator. This view is the same as taken by Hon'ble Supreme Court in the case of Deep Trading Co. (supra). However, in the case of Dharma Prathishthanam (supra) Hon'ble Supreme Court further held that in the event of appointment of an Arbitrator and reference of disputes to him being void ab initio as totally incompetent or invalid the Award shall be void and liable to be set aside de hors the provisions of Section 30 of the Arbitration Act, 1940, in any appropriate proceedings, when sought to be enforced or acted upon. In the case aforesaid the arbitral proceedings and the award were held void ab initio inter alia on the count that consent for appointment of an arbitrator in response to a notice for appointment of an arbitrator was given by other party subsequent to the notice period. In the presence case too the dispute was referred to the standing committee after lapse of the notice period. The reference as such was void ab initio. Accordingly, the award as a consequent to the arbitral proceedings in question is nullity. 12. Before parting with, I also deem it appropriate to mention that the standing committee should have stopped itself with the arbitral proceedings on having knowledge about filing of the present application. The continuation of the arbitral proceedings while having knowledge of the fact that an application has already been filed by the applicant for appointment of an independent arbitrator with a specific stand that the respondents have forfeited right for making reference to the standing committee lacks propriety. The haste shown by the respondents indicates their anxiety to fail the present application as well as the cause sought to be agitated by the applicant through arbitral proceedings. 13. Accordingly, this application is allowed. The haste shown by the respondents indicates their anxiety to fail the present application as well as the cause sought to be agitated by the applicant through arbitral proceedings. 13. Accordingly, this application is allowed. Shri S.C. Patni, retired Superintending Engineer (Irrigation), resident of 6-A-4, Jai Narain Vyas Colony, Bikaner, Rajasthan, is appointed as an arbitrator to initiate arbitral proceedings between the parties to resolve the dispute arising out of agreement No.11/07-08. The arbitrator appointed shall be entitled for fee, remuneration and other perks in accordance with the alternative dispute resolution 2009 prescribed by the Rajasthan High Court. The Registry is directed to send necessary intimation to Shri S.C. Patni, the arbitrator appointed alongwith a copy of this order within a period of 15 days from today.