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2013 DIGILAW 709 (JK)

K. K. Enterprises v. Union of India and others

2013-12-06

M.M.KUMAR

body2013
The instant petition filed under Section 11 of the Jammu and Kashmir Arbitration and Conciliation Act, 1997 (for brevity “the Act”) seeks appointment of an independent arbitrator in terms of clause 70 of the contract agreement executed between the parties on 16-9-2008 (Annexure A). 2. According to the agreement, the contract was allotted for special repairs to building No. P-13 (Ors MD ACCN) at Bikaner Lines at Domana Military Station. The contract was formally executed incorporating condition No. 70 of IAFW-2249. A period of six months was fixed for completing the work commencing from 25-9-2008. Accordingly the date of completion worked out was 24-3-2009 as the site was handed over to the contractor on 25-9-2008 (Annexure C). There are allegations that delay in completion was caused on account of occupancy by the users and the department. It is also claimed that the work to the tune of Rs. 12.70 lacs had been completed and reduced payment in 1st to 3rd RAR were made amounting to Rs. 5.21 lacs. The balance amount has not been paid in the 4th RAR. There is no issue of completion certificate nor extension of time. The petitioner has also alleged that vide letter dated 20-7-2009 the period of six months for completion of the work has been reduced to four months which is an unilateral act. It has been done after the period of six months which is another added component. On account of withholding the payment a dispute had arisen and the petitioner sent a notice on 6-8-2012 with a request for appointment of a neutral arbitrator in terms of clause 70 of IAFW-2249 (Annexure-F). 3. In response to notice of motion, objections have been filed by the respondents. The foremost objection raised by the respondents is that in terms of clause 70 no reference to arbitration could be made until alternative arrangements have been finalized by the Government to get the work completed by any other contractor after cancellation of the contract. It has also been stated that the contract has been cancelled on 31-12-2012 (Annexure R1) and alternative arrangements have not yet been made, therefore, application seeking appointment of arbitrator under Section 11 is premature. 4. Mr. It has also been stated that the contract has been cancelled on 31-12-2012 (Annexure R1) and alternative arrangements have not yet been made, therefore, application seeking appointment of arbitrator under Section 11 is premature. 4. Mr. Anil Mahajan, learned counsel for the petitioner has argued that clause 70 read with clause 54 of the agreement would operate only if the agreement has been cancelled during the period given for completion of the work. In that regard Mr. Mahajan has taken me through clause 70 and clause 54. Learned counsel has then placed reliance on a judgment of this Court rendered in the case of M/s. Mohindra Brothers v. Union of India and others (AA No. 23/2011 decided on 31-12-2012) where similar issue arose for consideration of this Court and has been decided in favour of the contractor. 5. Mrs. Seema Shekhar, learned counsel for the respondents has, however, submitted that till the alternative arrangements are made reference to arbitration would not be possible for the reason that it is a condition precedent/mandatory provision for taking such a course. 6. In order to appreciate that rival contentions it would be first apposite to read clause 70 of the contract agreement which is set out below:-- 70. Arbitration. All disputes, between the parties to the Contract (other than those for when the decision of the C.W.E. or any other person is by the Contract expressed to be final and binding) shall, after written notice by either (party to the Contract to the other of them, be referred to the sole arbitration of an Engineer Officer to be appointed by the authority mentioned in the tender document. Unless both parties agree in writing such reference shall not take place until after the completion or alleged completion of the Works or termination or determination of the Contract under Condition Nos. 55, 56 and 57 hereof. Provided that in the event of abandonment of the Works or cancellation of the Contract under Condition Nos. 52, 53 or 54 hereof, such reference shall not take place until alternative arrangements have been finalized by the Government to get the Works completed by or through any other Contractor or Contractors or Agency or Agencies. 55, 56 and 57 hereof. Provided that in the event of abandonment of the Works or cancellation of the Contract under Condition Nos. 52, 53 or 54 hereof, such reference shall not take place until alternative arrangements have been finalized by the Government to get the Works completed by or through any other Contractor or Contractors or Agency or Agencies. If the Arbitrator so appointed resigns his appointment or vacates his office or is unable or unwilling to act due to any reason whatsoever, the authority appointing him may appoint a new Arbitrator to act in his place. The Arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties, asking them to submit to him their statement of the case and pleadings in defence. The Arbitrator may, from time to time with the consent of the parties, enlarge the time upto but not exceeding one year from the date of his entering on the reference, for making and publishing the award. The Arbitrator shall give his award within a period of six months from the date of his entering on the reference or within the extended time as the case may be on all matters referred to him and shall indicate his findings, along with sums awarded, separately on each individual item of dispute. The venue of Arbitration shall be such place or places as may be fixed by the Arbitrator in his sole discretion. The Award of the Arbitrator shall be final and binding on both parties to the Contract. 7. A perusal of the aforesaid provision of contract would show its object, namely, that arbitration may not be permissible during the period of the contract unless there was agreement between the parties for reference to arbitration or in the event of abandonment of work or cancellation of work until alternate arrangements were finalized by the Government to get the work accomplished by or through any other contractor or agency. The completion of contract to which reference has been made in the terms and conditions would mean the period initially fixed including the extended period. However, after the expiry of the initial period or the extended period the proviso to clause 70 may not be applicable. Therefore, arbitration would be permissible. The completion of contract to which reference has been made in the terms and conditions would mean the period initially fixed including the extended period. However, after the expiry of the initial period or the extended period the proviso to clause 70 may not be applicable. Therefore, arbitration would be permissible. It is also clear that abandonment, cancellation or completion of work by any other contractor or agency would not hamper the appointment of arbitrator when the period of contract had otherwise expired. In that regard reliance of the petitioner on the judgment of this Court in the case of M/s. Mohindra Brothers (supra) is meritorious. 8. In the present case it has not been disputed that the period of contract was six months commencing from 25-9-2008. Even if the period is presumed to be four months as pleaded by the respondents, then also it has come to an end. The cancellation of the contract had been ordered on 31-12-2012 which is after the firing of the instant petition on 20-12-2012. Therefore, there is nothing on record which would result into deferring the appointment of an arbitrator particularly when arbitration clause 70 is present and there is existence of dispute. The aforesaid view is supported by the judgment of this Court rendered in Mohindra Brothers (supra). 9. As a sequel to the above discussion and keeping in view the option exercised by the learned counsel for the petitioner, I appoint Additional Chief Engineer in the office of Chief Engineer, Udhampur Zone, Post Office Garhi, Udhampur as arbitrator. He shall enter upon the reference and decide the same in accordance with law. Registrar Judicial shall sent intimation to the arbitrator with a copy of this order. Order accordingly.