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2014 DIGILAW 1576 (ALL)

BAGESHWARI PROJECT v. ANAND PROJECTS LIMITED, LALITPUR

2014-05-14

PANKAJ MITHAL

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JUDGMENT Hon’ble Pankaj Mithal, J.—Heard Sri Mayank Agrawal, learned counsel for the petitioners and Sri Ashish Mishra, learned counsel for the respondent. 2. They have agreed for the final disposal of the petition on the basis of the pleadings exchanged between them which have been perused by me. 3. The petition seeks for an appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) in connection with the disputes pertaining to letter of award dated 24.2.2012 for “Open Steel Yard Works” Coal Based Thermal Power Project at Lalitpur, Uttar Pradesh. 4. The parties admit that the said letter of award provides for settlement of disputes by arbitration and that Clause (T) of the major conditions thereof clearly provides that all disputes shall be resolved through arbitration and the decision of arbitrator shall be final and binding. The Director of the respondent alone would be competent to appoint the sole arbitrator and the place of sitting of the arbitrator shall be at Noida. 5. The petitioners have invoked the arbitration clause vide notice sent by registered/speed post on 4.4.2013 to the Director of the respondent requesting for the settlement of the claims or to refer the disputes to the arbitrator within a period of 30 days. 6. The notice has been served upon the respondent on 8.4.2013 as per track result of the India Post. 7. The respondent in the counter-affidavit admits the receipt of the above notice but contends that in response thereof the Director had appointed the arbitrator on 26.4.2013 and the arbitrator appointed has even given his consent to act as an arbitrator. 8. The petitioners deny knowledge of the order of the Director dated 26.4.2013 by which the dispute is said to have been referred to the arbitral tribunal. 9. In view of the aforesaid rival contentions of the parties the moot question which surfaces for consideration is whether the appointment of the arbitrator vide the letter dated 26.4.2013 of the Director would stand vitiated for want of non communication to petitioners and would not affect the right of the petitioners to seek appointment of an arbitrator under Section 11 of the Act. 10. The letter of the Director dated 26.4.2013 is annexure-1 to the counter-affidavit. It is a letter addressed to the arbitrator requesting him to enter into reference and to adjudicate the dispute. 10. The letter of the Director dated 26.4.2013 is annexure-1 to the counter-affidavit. It is a letter addressed to the arbitrator requesting him to enter into reference and to adjudicate the dispute. The notice of the petitioners dated 4.4.2013 invoking the arbitration has been enclosed with the above letter making it clear that it is in reference to the disputes raised by the petitioners. The said letter is neither addressed to the petitioners nor its copy has been endorsed to them. It is simply a communication between the respondent and the arbitrator alleged to be appointed with no information to the petitioners. 11. The respondent in the counter-affidavit simply states that the arbitrator was appointed by the Director vide order letter dated 26.4.2013. The arbitrator so appointed has given his consent to act as an arbitrator vide letter dated 27.4.2013. 12. The counter-affidavit nowhere contains an averment that the letter appointing the arbitrator was sent or communicated to the petitioners. It has not been stated that the arbitrator appointed on receiving the appointment letter issued any notice or intimation to the petitioners to submit their claim. 13. In short, there is nothing in the counter-affidavit or otherwise to show that the information about the appointment of the arbitrator was communicated to the petitioners and that they had the notice or knowledge of the said appointment before approaching the Chief Justice under Section 11 of the Act. 14. In view of the aforesaid facts and circumstances, it is established from the record that the appointment of the arbitrator vide letter dated 26.4.2013 was neither communicated to the petitioners nor was otherwise made known to them. 15. Generally, an order would be presumed to have been made or passed when it is signed but where the order is required to be communicated to a person to enable him to take recourse to law if he is aggrieved by it, the order is necessarily required to be communicated and would not take affect unless it is so communicated. 16. It is common knowledge that an order in such cases takes affect only when it is served upon the person affected by that order so that he can be bounded by it. 17. In this view of the matter, an order passed or signed but not communicated to the party affected would only be an order of the provisional nature having no binding effect. 17. In this view of the matter, an order passed or signed but not communicated to the party affected would only be an order of the provisional nature having no binding effect. 18. In State of Punjab v. Amar Singh Harika, AIR 1966 SC 1313 , it has been laid down that mere passing of an order of dismissal would not be effective unless it is published and is communicated to the officer concerned. In other words, the principle appears to be clear that an order passed by an authority cannot be said to take effect unless the same is communicated to the party affected. An un-communicated order can neither create any rights in favour of a party nor take away the rights of any affected party till it is communicated to the party concerned. 19. This is the view which has been reiterated by the Supreme Court in Greater Mohali Area Development Authority v. Manju Jain, (2010) 9 SCC 157 , wherein it has been held that if an order is passed, but not communicated to the party concerned it does not create any legal right which can be enforced through the Court of law, as it does not become effective till it is communicated. 20. The ratio of the above decisions is that the communication, publication or notification of an order is a sine qua non for creating an enforceable right and a mere passing of an order or writing a letter and keeping it concealed from the party concerned would be nonest and no order in the eyes of law. 21. In addition to the above, Section 3 of the Act provides for the manner of service or deemed service of written communication. It provides that the communication would be deemed to have been received by the party to whom it is addressed on the date it is delivered to him. So delivery of the communication to the party concerned is essential. The delivery may be actual or constructive but a letter or communication or order which has not been sent to the party cannot be delivered or deemed to be delivered. 22. So delivery of the communication to the party concerned is essential. The delivery may be actual or constructive but a letter or communication or order which has not been sent to the party cannot be delivered or deemed to be delivered. 22. The communication of the letter or order appointing an arbitrator is mandatory for the simple reason that if it is not communicated or published or notified, the party would not come to know of it which may lead to ex parte arbitration or manufacturing of an appointment of an arbitrator in back date to frustrate the proceedings under Section 11 of the Act. 23. His Lordship of the Supreme Court in Bipromasz Bipron Trading SA v. Bharat Electronics Ltd. (BEL), (2012) 6 SCC 384 , interpreting Section 3(2) of the Act ruled that so far as the authority/officer is concerned, the order comes into force from the date it is made or passed but so far the affected party is concerned, the relevant date would be the date on which it is communicated to him. 24. In the instant case the letter dated 26.4.2013 appointing an arbitrator was not communicated to the petitioners obliterating the very purpose of appointment of an arbitrator. It cannot therefore, be recognized as a valid appointment and has to be treated as nonest in law. 25. The Director of the respondent thus failed to appoint an arbitrator not only within the notice period but till the presentation of this petition. 26. In such circumstnaces, it cannot be said that the petition is not maintainable, pre-mature or stand frustrated. 27. The invocation of the arbitration clause by the petitioners vide notice dated 4.4.2013 remains unattended and the procedure contemplated for appointment of arbitrator stands exhausted entitling the petitioners to approach the Chief Justice under Section 11 of the Act for the appointment of an arbitrator. 28. In the aforesaid facts and circumstances, as there is an arbitration agreement between the parties and the procedure prescribed under the agreement for appointment of arbitrator has failed for the resolution of dispute in relation thereto it is but natural for the Chief Justice or his designate to intervene and to appoint an independent and impartial arbitrator. 29. 28. In the aforesaid facts and circumstances, as there is an arbitration agreement between the parties and the procedure prescribed under the agreement for appointment of arbitrator has failed for the resolution of dispute in relation thereto it is but natural for the Chief Justice or his designate to intervene and to appoint an independent and impartial arbitrator. 29. Accordingly, as a designate of the Chief Justice in exercise of powers under Section 11 of the Act, Sri Virendra Kumar Agarwal, a retired District Judge, resident of 1229, Sector 37, NOIDA (U.P.), Mobile No. 09971853518, 09716848598, who is at serial No. 30 of the panel of the arbitrator of the retired Judicial Officers maintained by the High Court is appointed as a sole Arbitrator to adjudicate the disputes between the parties. 30. Let a copy of this order be sent to the learned Arbitrator with request to enter into arbitration forthwith and complete it at the earliest. 31. Petition is allowed.