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2013 DIGILAW 484 (HP)

NARAIN DASS NAIK v. STATE OF H. P.

2013-05-28

SANJAY KAROL

body2013
JUDGMENT : Sanjay Karol, J. 1. This is a petition filed under the provisions of the Arbitration and Conciliation Act, 1996, seeking appointment of an Arbitrator, in terms of Arbitration Clause No. 25 contained in the agreement dated 29.3.2007, executed between the petitioner and the respondents, for construction of PHQ Dachhain Km 0/0 to 8/435 (SH: Formation Cutting 5/7 mtrs. Wide road, C.D. works, providing essential Kharanja soling, km. stone, 200 mtrs RD stone and logo sign Board) under PMGSY/Bharat Nirman Yojna for an estimated cost of Rs. 121.488 lakhs. The agreement was duly executed, containing arbitration Clause-25. Certain disputes having arisen between the parties, in relation to the works executed by the petitioner, in terms of the agreement, petitioner by invoking the arbitration clause, vide letter dated 12.12.2011 (Annexure C-3), requested the respondents to appoint an arbitrator. Prior thereto, petitioner had also invoked the Disputes Redressal Mechanism, in terms of Clause-24 of the Agreement. 2. Noticeably, respondents failed to take any action on the petitioner's request. Consequently, on 23.1.2012, petitioner filed the instant petition under the provisions of subsection (6) of Section 11 of the Arbitration and Conciliation Act, 1996, requesting for appointment of an arbitrator. 3. The petition is contested on the ground that the respondents have already appointed an arbitrator on 23.1.2012. The arbitrator has entered reference and the proceedings are going on before him. It stands clarified by the petitioner that upon receipt of communication from the arbitrator, he was informed not to proceed with the arbitral proceedings, since the petitioner has invoked the jurisdiction of this Court under the provisions of the Act. In effect, petitioner has not participated in the proceedings by filing his claim petition. 4. As such, the only question, which needs to be considered, is as to whether appointment of the arbitrator by the respondents is in accordance with law or not. 5. Admittedly, in the instant case, prior to the institution of the present petition, respondents did not take any action of appointing the arbitrator, in terms of Clause-25 of the agreement. Order of appointment of arbitrator dated 23.1.2012 was also not communicated to the petitioner. As such, keeping in view the decisions rendered by the apex Court in Datar Switchgears Ltd. vs. Tata Finance Ltd. and Another, (2000) 8 SCC 151 , Union of India vs. Bharat Battery Manufacturing Co. Order of appointment of arbitrator dated 23.1.2012 was also not communicated to the petitioner. As such, keeping in view the decisions rendered by the apex Court in Datar Switchgears Ltd. vs. Tata Finance Ltd. and Another, (2000) 8 SCC 151 , Union of India vs. Bharat Battery Manufacturing Co. (P) Ltd. (2007) 7 SCC 684 , Bharat Sanchar Nigam Ltd. and Another vs. Motorola India Pvt. Ltd. (2009) 2 SCC 337 , Indian Oil Corporation Ltd. and Others vs. Raja Transport (P) Ltd. (2009) 8 SCC 520 and Bipromasz Bipron Trading SA vs. Bharat Electronics Limited (BEL), (2012) 6 SCC 384 , this action of the respondents cannot be said to be legal. Hence, his appointment cannot be said to be binding on the parties. 6. Execution of the agreement; existence and validity of the arbitration clause; and existence of disputes referable to arbitration having arisen out of the works allotted to the petitioner and agreement executed in relation thereto, is not in dispute before this Court. 7. In the instant case, the arbitration clause contains certain procedure to be followed by the parties. Sole arbitrator can be appointed to adjudicate the disputes, having arisen out of and in terms of the agreement, inter se the parties to this lis. As such, as prayed for, in my considered view, all disputes inter se the parties can be referred to the arbitration of Shri M.M. Khanna, Senior Advocate, 36/3, Khanna Shopping Complex, Middle Bazaar, Shimla-171001. His consent has been obtained. Ordered accordingly. 8. The Arbitrator shall issue notice to the parties for entering reference within four weeks from the date of receipt of copy of this order. An endeavour shall be made to complete the proceedings at the earliest and definitely not later than nine months from the date of entering reference. Parties undertake to fully cooperate and not take any unnecessary adjournment. Proceedings can be held anywhere within the State of Himachal Pradesh. Award shall be reasoned. 9. Fee of the Arbitrator shall be Rs. 1,50,000/- which shall be equally shared by the parties. 25% of the fee shall be paid at the time of entering the reference 25% prior to the recording of evidence; and the remaining feel shall be paid at the time of passing of the award. Award shall be reasoned. 9. Fee of the Arbitrator shall be Rs. 1,50,000/- which shall be equally shared by the parties. 25% of the fee shall be paid at the time of entering the reference 25% prior to the recording of evidence; and the remaining feel shall be paid at the time of passing of the award. In addition to the fee, the Arbitrator shall also be entitled for all secretarial allowances, including travelling, if so required, up to the project site, lodging and boarding, which shall be taken care of by the parties. The Arbitrator shall be at liberty to take assistance of any technical expert(s), whose expenses shall also be equally shared by the parties. Registry is directed to send a copy of this order to the Arbitrator, immediately. 10. Petition stands disposed of, so also the pending application, if any.