Capital Laminates Pvt. Ltd. v. General Manager, North Eastern Railway
2014-05-26
PANKAJ MITHAL
body2014
DigiLaw.ai
JUDGMENT Pankaj Mithal,J. Heard Sri R.P. Mishra, learned counsel for the petitioner and Sri A.K. Gaur, learned counsel who appears for the respondents. 2. The then Acting Chief Justice vide order dated 28.9.2012 had referred the dispute between the parties to an arbitrial tribunal. The respondents have applied for recall of the aforesaid order on the ground that the reference was without hearing the counsel for the respondents. 3. On the recall appication the Court vide order dated 11.1.2013 invited a counter affidavit and in the meantime the sole Arbitrator was requested not to proceed with the matter. Thereafter, by an order dated 13.2.2014 the earlier counsel appearing for the respondents was requested to clarify the position about his presence on 28.9.2012.The order dated 5.3.214 records the satisfaction of the Court that the order appointing the Arbitrator was passed in the absence of the counsel for the respondents on account of some communication gap. 4. In view of the aforesaid facts and circumstances the order dated 28.9.2012 is recalled and the recall application no. 355223 of 2012 and the delay condonation application no. 355217 of 2012 accompanying the same are allowed. 5. Heard learned counsel for the parties on the merits of the petition as well. 6. The petitioner was awarded a purchase order dated 17.1.2011 and contract was entered into between the parties. The said contract in clause 17 contains an arbitration agreement providing for referring the dispute arising from the contract or in relation thereto to an Arbitrator appointed by the General Manager of the Northern Eastern Railways, Gorakhpur. On account of certain disputes with regard to payment of tax on the goods supplied and for non supply of the goods in time the contract was allegedly cancelled vide order dated 29.11.2011. 7. In view of cancellation of the contract, the petitioner demanded appointment of an Arbitrator for resolving the dispute between the parties. The demand was made by letter/notice dated 30.12.2011 annexure 8 to the writ petition. It is contended that despite the above notice, the dispute had not been referred to the Arbitrator and therefore the petitioner has been compelled to approach the Chief Justice or his designate. 8. Sri A.K. Gaur, learned counsel for the respondents in defence contend that once the contract has been cancelled, there is no occasion for appointment of an Arbitrator.
It is contended that despite the above notice, the dispute had not been referred to the Arbitrator and therefore the petitioner has been compelled to approach the Chief Justice or his designate. 8. Sri A.K. Gaur, learned counsel for the respondents in defence contend that once the contract has been cancelled, there is no occasion for appointment of an Arbitrator. Secondly, the notice invoking the arbitration clause dated 30th December 2011 was never received by the authority concerned and as such the procedure prescribed for appointment of an Arbitrator under the contract has not been exhausted. Lastly, he has submitted that in case any Arbitrator has to be appointed, it has to be in accordance with Section 11 (8) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as an "Act") ie. to an Arbitrator named in the contract. 9. It is settled that the arbitration agreement in the contract has to be read and considered separately. It does not perish with the cancellation of the contract. It continues to survive for the purposes of adjudication of the disputes which may arise between the parties in relation to the said contract. 10. It has been settled by a series of decisions of the Supreme Court, the last being AIR 2010 SC 488 Branch Manager, M/s. Magma Leasing and Finance Limited and another Vs. Polturi Madhavilata and others that even if the contract between the parties containing an arbitration agreement comes to an end or perishes the arbitration agreement continues to exist though for a limited purpose for deciding the dispute which may have arisen between the parties under the said contract. 11. In view of the above, the first submission of Sri A.K. Gaur, learned counsel for the respondents has no force and is rejected. 12. The petitioner has invoked the arbitration clause by letter/notice dated 30th December 2011. 13. The said letter/notice clearly mentions and requests the General Manager, North Eastern Railways, Gorakhpur to appoint an Arbitrator for resolving the dispute between the parties. 14. In paragraph 17 of the petition it has been mentioned that the petitioner has written the above letter for appointment of an Arbitrator to the General Manager, Northern eastern Railway, Gorakhpur.
13. The said letter/notice clearly mentions and requests the General Manager, North Eastern Railways, Gorakhpur to appoint an Arbitrator for resolving the dispute between the parties. 14. In paragraph 17 of the petition it has been mentioned that the petitioner has written the above letter for appointment of an Arbitrator to the General Manager, Northern eastern Railway, Gorakhpur. In reply to the said averment in paragraph 8 of the counter affidavit it has been stated that the notice dated 30.12.2011 as alleged to have been given, has not been received by the authority concerned. However, by manipulation it has been shown to have been received as per the register of the receipt maintained by the office of the authority. 15. The very fact that the record of the office of the authority concerned records the receiving? and there is no material to prove any manipulation or foul play, it is sufficient to prove its service. If it has not been placed before the officer concerned, it reflects upon the working of the department for which the petitioner can not be blamed. 16. In view of the above, the said notice would be deemed to have been received by the authority concerned. 17. Section 11 (8) of the Act only provides that in appointing an Arbitrator, the Chief Justice or the person designated by him shall pay due regard to the qualifications required for the Arbitrator laid down in the agreement. 18. The agreement does not lay down any qualification for appointment of an Arbitrator. It only provides that the authority concerned shall refer the matter to a departmental Arbitrator. It does not amount to laying down any qualification. Moreover, reference to the departmental Arbitrator may be made by the authority of the department but once the procedure provided under the contract has been exhausted or has failed, the Chief Justice or his designate is free to appoint an independent and impartial Arbitrator which may not be necessarily to be one from the department. 19. The three Judges Bench of the Supreme court in Deep Trading Company Vs. Indian Oil Corporation and others (2013) 4 SCC 35 has clearly ruled that where the departmental procedure for appointment of the Arbitrator has failed, the Chief Justice or his designate is competent to appoint an outsider who is supposed to be more independent and impartial. 20.
19. The three Judges Bench of the Supreme court in Deep Trading Company Vs. Indian Oil Corporation and others (2013) 4 SCC 35 has clearly ruled that where the departmental procedure for appointment of the Arbitrator has failed, the Chief Justice or his designate is competent to appoint an outsider who is supposed to be more independent and impartial. 20. In view of the aforesaid facts and circumstances, I am of the view that as the contract contains an arbitration clause, the procedure prescribed under the contract for appointment of an arbitrator has failed and the claim or dispute is not apparently stale, dead or time barred, it is a fit case for appointment of an independent and impartial Arbitrator by the Chief Justice or his designate. 21. Accordingly, in exercise of powers under Section 11 of the Act, Mr. Justice Janardan Sahai, a former Judge of this Court, residing 20/12, Panna Lal Road, Allahabad ( U.P.) Mobile No. 9415316955 is hereby appointed as the sole Arbitrator to adjudicate the dispute between the parties in relation to the above contract. 22. Let a copy of this order be sent to the learned Arbitrator with request to enter into arbitration forthwith.