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2014 DIGILAW 1945 (RAJ)

Mehta Associates, Kishangarh v. State of Rajasthan

2014-12-02

GOVIND MATHUR

body2014
JUDGMENT 1. - The applicant M/s. Mehta Associates entered into an agreement with the respondents for "Construction of Aqueducts at RD 500 m & RD 1700 m of Saroda Minor of Bhika Bhai Sagwara Canal (BBSC), District Banswara". The contract amount of the work was of Rs. 74,51,756/-. The work commenced on 01.3.2010 and was to be completed on or before 31.4.2011. As per the applicant, the Superintending Engineer and Executive Engineer of the respondent department created several hurdles in completion of work that resulted into stoppage of the work assigned. The applicant then submitted its claim for a sum of Rs. 13,08,273/-. The amount claimed was not paid in totality, thus, the applicant by a notice dated 18.3.2013 made a request to the Executive Engineer, Distributary Division, LMC, Mahi Project Garhi, District Banswara to invoke Clause 23 of the contract that pertains to arbitral proceedings. No positive action was taken by the respondents, thus, this application as per provisions of Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act of 1996') was presented before this Court on 10.6.2013. 2. After filing of the application aforesaid the applicant in the month of September, 2014 received a notice for appearing before the Standing Committee to get the dispute resolved. The applicant responded the notice with assertion that no proceedings could have been referred to the Standing Committee as an application under Section 11(6) of the Act of 1996 was already filed and is pending consideration before Hon'ble Rajasthan High Court. Inspite of having this information, the Standing Committee passed an award on 7.10.2014. 3. Learned counsel for the applicant while placing reliance upon a judgment of this Court in M/s. Mahendra Singh & Co. v. State of Rajasthan & Anr., reported in 2014(1) RLW 514 (Raj.) , submits that no reference proceedings as per Clause 23 could have been undertaken by the respondents after expiry of limitation period of 30 days from the date of receiving notice sent by the applicant for initiating process of arbitration. 4. Learned counsel for the respondents while accepting the factual position noticed above submits that after passing of the award the applicant is having remedy under Section 34 of the Act of 1996 and, as such, the appointment of an arbitrator by exercising powers under Section 11(6) of the Act of 1996 shall be nothing but plurality of litigation. 4. Learned counsel for the respondents while accepting the factual position noticed above submits that after passing of the award the applicant is having remedy under Section 34 of the Act of 1996 and, as such, the appointment of an arbitrator by exercising powers under Section 11(6) of the Act of 1996 shall be nothing but plurality of litigation. 5. I do not find any merit in the argument advanced. This Court in the case of M/s. Mahendra Singh & Co. (supra) considered this aspect of the matter and held as under:- "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 the 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 v. 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 present 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." 6. In view of the law laid down by this Court in the case of M/s. Mahendra Singh & Co. (supra) this application deserves acceptance. Accordingly, the same is allowed. The award dated 7.10.2014 is declared absolutely non-consequential and Shri Kanak Sahlot, Retired District & Sessions Judge, resident of Plot No.1, Padmawati Nagar, Paota 'B' Road, Jalam Vilas, Jodhpur (Raj.) is hereby appointed as the sole arbitrator to resolve the dispute between the parties as raised in notice dated 18.3.2013. The Arbitrator shall be entitled for re-numeration and other perquisites in accordance with the Alternative Dispute Resolution, 2009 prescribed by the Rajasthan High Court.The Registry is directed to send a copy of this order to the sole arbitrator at the address given at the earliest.Application allowed. *******