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2017 DIGILAW 2117 (JHR)

Hind Electric Co. v. Bharat Sanchar Nigam Limited

2017-12-08

APARESH KUMAR SINGH

body2017
JUDGMENT : APARESH KUMAR SINGH, J. 1. Heard learned counsel for the parties. 2. Applicant is a party to 5 agreements with the Respondent, which are dated 08.06.2009, 22.09.2009, 12.08.2010, 19.08.2010 and 13.04.2012 in respect of which a dispute has arisen between them which are amenable to arbitration under Clause 25 of the agreements in question. Clause 25 is common in all agreements and is usefully quoted herein under:- "Clause 25 -Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions herein before mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions, orders or these conditions or otherwise concerning the works or the execution or failure to execute the same whether arising during the progress of the work or after the cancellation, termination, completion or abandonment thereof shall be dealt with as mentioned hereinafter:- (i) If the contractor considers that he is entitled to any extra payment or compensation in respect of the works over and above the amounts admitted as payable by the BSNL or in case the contractor wants to dispute the validity of any deductions or recoveries made or proposed to be made from the contract, the contractor shall forthwith give notice in writing of his claim, in this behalf to the Engineer-in-Charge within 30 days from the date of disallowance thereof for which the contractor claims such additional payment or compensation or disputes the validity of any deduction or recovery. The said notice shall give full particulars of the claim, grounds on which it is based and detailed calculations of the amount claimed and the contractor shall not be entitled to raise any claim nor shall the BSNL be in any way liable in respect of any claim by the contractor unless notice of such claim shall have been given by the contractor to the Engineer-in-Charge in the manner and within the time as aforesaid. The contractor shall be deemed to have waived and extinguished all his rights in respect of any claims not notified to the Engineer-in-Charge in writing in the manner and within the time aforesaid. The contractor shall be deemed to have waived and extinguished all his rights in respect of any claims not notified to the Engineer-in-Charge in writing in the manner and within the time aforesaid. (ii) The Engineer-in-Charge shall give his decision in writing on the claims notified by the contractor within 30 days of the receipt of the notice thereof. If the contractor is not satisfied with the decision of the Engineer-in-Charge, the contractor may within 15 days of the receipt of the decision of the Engineer-in-Charge submit his claims to the conciliating authority named in Schedule 'F' for conciliation along with all details and copies of correspondence exchanged between him and the Engineer-in-Charge. (iii) The party initiating conciliation shall send to the other party a written invitation to conciliate. Conciliation proceedings shall commence when the other party accepts in writing the invitation to conciliate. If the other party rejects the invitation, or does not reply within thirty days from the date of invitation, there will be no conciliation proceedings. (iv) When it appears to the Conciliator that there exists element of a settlement which may be acceptable to the parties, he shall formulate the terms of a possible settlement and submit them to parties for their observation after receiving the observations of the parties. He may reformulate the terms of a possible settlement in the light of such observations. If the parties reach agreement on settlement of the dispute, they may draw up and sign a written settlement agreement. Parties may request the Conciliator to draw up or assist them in drawing up the settlement agreement. Such settlement agreement shall have the same status and effect as if it were an arbitral award on agreed terms on the substance of the dispute rendered by an arbitral tribunal under Section 30 of Arbitration and Conciliation Act, 1996. If a settlement does not appear possible, the Conciliator, after consultation with the parties will give a written declaration that further efforts at Conciliation are no longer justified and the conciliation proceeding are terminated. If a settlement does not appear possible, the Conciliator, after consultation with the parties will give a written declaration that further efforts at Conciliation are no longer justified and the conciliation proceeding are terminated. (v) When conciliation proceeded have become infructuous or have been terminated, the party, which initiated the Conciliation shall, within a period of 30 days of termination thereof shall give a notice, in the form prescribed by the BSNL, to the Chief Engineer, Bharat Sanchar Nigam Limited in-charge of the work or if there be no Chief Engineer, to the Administrative Head of the Bharat Sanchar Nigam Limited for appointment of an arbitrator to adjudicate the notified claims failing which the claims of the contractor shall be deemed to have been considered absolutely barred and waived. (vi) Except where the decisions have become final, binding and conclusive in terms of the contract, all disputes arising out of the notified claims of the contractor as aforesaid and all claims of the BSNL shall be referred for adjudication through the arbitration by the sole arbitrator appointed by the Chief Engineer, Bharat Sanchar Nigam Limited in-charge of the work or if there be no Chief Engineer, the Administrative Head of the Bharat Sanchar Nigam Limited. It will also be no objection to any such appointment that the arbitrator so appointed is a BSNL Employee and that he had to deal with the matters to which the Contract relates in the course of his duties as BSNL Employee. If the arbitrator so appointed is unable or unwilling to act or resigns his appointment or vacates his office due to any reason whatsoever, another sole arbitrator shall be appointed in the manner aforesaid by the said Chief Engineer. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is a term of this contract that the party invoking arbitration shall give a list of disputes with amounts claimed in respect of each dispute along with the notice for appointment of arbitrator. It is also a term of this contract that no person other than a person appointed by such Chief Engineer, Bharat Sanchar Nigam Limited or the administrative head of the Bharat Sanchar Nigam Limited as aforesaid should act as arbitrator and if for any reasons that is not possible the matter shall not be referred to arbitration at all. It is also a term of this contract that no person other than a person appointed by such Chief Engineer, Bharat Sanchar Nigam Limited or the administrative head of the Bharat Sanchar Nigam Limited as aforesaid should act as arbitrator and if for any reasons that is not possible the matter shall not be referred to arbitration at all. The conciliation and arbitration shall be conducted in accordance with the provisions of the Arbitration & Conciliation Act 1996 or any statutory modification or re-enactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceeding under this clause. It is also a term of this contract that the arbitrator shall adjudicate on only such disputes as are referred to him by the appointing authority and give separate award against each disputes and claim referred to him. The arbitrator shall give reasons for the award for each dispute referred to him. It is also a term of the contract that if any fees are payable to the arbitrator these shall be paid equally by both the parties. It is also a term of the contract that the arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties calling them to submit their statement of claims and counter-statement of claims. The venue of the arbitration shall be such place as may be fixed by the arbitrator in his sole discretion. The fees, if any, of the arbitrator shall, if required to be paid before the award is made and published, be paid half and half by each of the parties. The cost of the reference and of the award(including the fees, if any, of the arbitrator) shall be in the discretion of the arbitrator who may direct to any, by whom and in what manner, such costs or any part thereof, shall be paid and fix or settle the amount of costs to be so paid". 3. It is also not in dispute that in terms of Clause 25, after efforts of conciliation failed, the Respondents proposed to appoint one Sri Saurabh Tyagi, Chief Engineer(E) BSNL Electrical Zone, Meerut, U.P. Vide letter dated 26.10.2016 (Annexure-7). This was preceded by a request for appointment of a neutral Arbitrator by the Applicant through legal notice dated 20.10.2016 (Annexure-6). 3. It is also not in dispute that in terms of Clause 25, after efforts of conciliation failed, the Respondents proposed to appoint one Sri Saurabh Tyagi, Chief Engineer(E) BSNL Electrical Zone, Meerut, U.P. Vide letter dated 26.10.2016 (Annexure-7). This was preceded by a request for appointment of a neutral Arbitrator by the Applicant through legal notice dated 20.10.2016 (Annexure-6). The proposed Arbitrator furnished declaration in terms of Sixth Schedule of the Arbitration and Conciliation Act, 1996 as amended by the Act No. 3 of 2016 in respect of each of the 5 agreements vide letters dated 26.11.2016 (Annexure-9). The proposed Arbitrator fairly disclosed his relationship with the Respondent BSNL as a regular Senior Administrative Grade Employee looking after the Electrical/Electromechanical work and H.R. Management also of U.P. (W) Circle. The proposed Arbitrator requested both the parties to give unconditional no objection certificate about his ability and his capacity to devote sufficient time to the arbitration proceedings and deliver the award within 12 months. In the meantime the applicant vide his letter dated 11.11.2016 (Annexure-8) gave his consent for appointment of Sri Saurabh Tyagi as sole Arbitrator to decide the dispute in relation to the aforesaid agreements on the following conditions:- (a) That the appointment as sole arbitrator shall not be disturbed till finalization of the arbitral proceedings, even if he retires. (b) He will act in an impartial manner. (c) The venue of the arbitral proceedings shall be at Ranchi and all costs, expenses, whatsoever shall be borne by BSNL. (d) Since the proposed arbitrator is drawing salary from BSNL, no further expenses in terms of fees or otherwise will be admissible to him. (e) The proceeding would be executed in accordance with the Act of 1996. The applicant further insisted upon compliance of the conditions contained in proviso to Section 12(5) of the Act of 1996. As per the said proviso, notwithstanding any prior agreement to the contrary, in case the relationship of the proposed Arbitrator falls under any of the category specified in the Seventh Schedule, he would be ineligible to be appointed as arbitrator; provided that parties may, subsequent to disputes having arisen between them, waive the applicability of this sub-section by an express agreement in writing. 4. 4. Petitioner however on receipt of letter dated 26.11.2016 of the proposed arbitrator gave unconditional No Objection Certificate in respect of appointment of Sri Saurabh Tyagi as sole Arbitrator in the arbitration case. Those certificates are enclosed as Annexure-10 series, all dated 9.12.2016. The text of letter is also quoted here under "Sub:- Unconditional no objection certificate Reg: Your letter No. 113/CEE/MT/2016-17/296 dt. 26.11.16 Sir, In response to your letter under reference, we hereby grant our unconditional no objection certificate and state that : (1) We do not have any doubt about the independence or impartiality of Mr. Saurabh Tyagi so as to be appointed as Sole Arbitrator in the Arbitration Case. (2) We also do not have any doubt about the ability of Mr. Saurabh Tyagi and the fact that Mr. Saurabh Tyagi would be able to devote sufficient time and further he would be able to deliver the Award within a time period of 12 months. The other aspects of the letter may be decided mutually." 5. Petitioner however insisted again through letter dated 24.12.2016 addressed to the Executive Engineer (E) BSNL Electrical Division, Main Road Ranchi on the aforesaid conditions and for a formal separate agreement in terms of proviso to Section 12(5) of the Act of 1996. Lastly the applicant served the legal notice dated 16.1.2017 stating that failure on the part of Respondents to execute the agreement and agree to the other terms proposed by him, would leave him with no option but to withdraw his consent and take recourse to section 11(6) of the Act of 1996 for appointment of an arbitrator by the Hon'ble Jharkhand High Court. This was replied by Annexure-13 on 21.02.2017 by the Respondents conveying their understanding that the applicant had conveyed his unconditional consent relating to appointment of Sri Saurabh Tyagi as sole Arbitrator. They also requested the petitioner to furnish the agreements strictly as per "usual form" for entering into an agreements under Section 12(5) of the Act of 1996, copy of which was also enclosed thereto. They also requested the petitioner to furnish the agreements strictly as per "usual form" for entering into an agreements under Section 12(5) of the Act of 1996, copy of which was also enclosed thereto. Petitioner has thereafter issued another letter at Annexure-14 dated 22.02.2017 whereby they insisted upon entering into agreement in terms of Section 12(5) of the Act of 1996 and also requested the proposed arbitrator, Sri Saurabh Tiwary to give his consent for (i) holding of arbitral proceedings at Ranchi and all costs, expenses, whatsoever will be payable by BSNL alone and (ii) No expenses in terms of fees or otherwise will be receivable by the Arbitrator. The petitioner threatened to invoke the provisions of Section 11 of the Act of 1996 if the Respondents failed to act within 7 days of the receipt of notice. Thereafter, petitioner has invoked the jurisdiction of Hon'ble the Chief Justice in terms of Section 11(6)(c) of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator to adjudicate the dispute between the parties arising out of 5 agreements. 6. A counter affidavit has been filed by the Respondent BSNL. Learned Counsel for the Respondent BSNL has made specific reference to the Arbitration Clause 25, which contains the clear stipulation that if any fees are payable to the arbitrator these shall be paid equally by both the parties and venue of the arbitration shall be such place as may be fixed by the arbitrator in his sole discretion. The cost of the reference and of the award (including the fees, if any, of the arbitrator) shall be in the discretion of the arbitrator. Learned counsel for the Respondent further submits that the petitioner has given unconditional undertaking about the impartiality and independence of Sri Saurabh Tyagi for his appointment as sole arbitrator. It has also conveyed its confidence in the proposed Arbitrator to be able to devote sufficient time to complete the entire arbitration within a period of 12 months. The only condition now being created to stall the arbitration proceedings are in relation to the fees and expenses and venue of the arbitration proceeding which are clearly governed by the terms of the Arbitration Clause 25 under the agreements in question entered into between the parties. 7. The only condition now being created to stall the arbitration proceedings are in relation to the fees and expenses and venue of the arbitration proceeding which are clearly governed by the terms of the Arbitration Clause 25 under the agreements in question entered into between the parties. 7. Learned counsel for the Respondent submits that there is no hesitation on the part of the Respondents in executing any express agreement as also contemplated in terms of proviso to Section 12(5) of the Act of 1996. However the two conditions insisted upon by the petitioner contrary to the agreed terms cannot be acceded to. Petitioner in an unreasonable manner raised a bogey at this stage when the Arbitrator has already entered into reference after receipt of the unconditional no objection certificate from both parties as per letter dated 31.1.2017(Annexure-R/6 to the counter affidavit). The unconditional no objection certificate of the Respondents to the appointment of arbitrator is also enclosed as Annexure R/5 dated 7.12.2016. Learned counsel for the Respondent submits that there is no substance in the plea raised for appointment of an arbitrator by this Court. In such circumstance, the instant application deserves to be dismissed. 8. I have considered the submission of the parties and gone through the relevant materials on record noted above and also the provisions of law applicable to the case at hand. Following facts have emerged upon consideration of the factual matrix of the case, terms and conditions of the arbitration clause and the correspondences entered between the parties:- (i) In terms of the arbitration clause, parties had agreed for appointment of the sole arbitrator and that they would have no objection to any such appointment, if the arbitrator so appointed is a BSNL employee and had the occasion to deal with the contract in course of his duties as BSNL employees. They had also agreed that the provisions of the Arbitration and Conciliation Act, 1996 along with its any statutory modification or re-enactment thereof would apply to the arbitration proceeding under the said clause. (ii) In terms of the contract any fees payable to the arbitrator shall be equally borne by both the parties. (iii) It would be within the sole discretion of the arbitrator to decide the venue of the arbitration. (ii) In terms of the contract any fees payable to the arbitrator shall be equally borne by both the parties. (iii) It would be within the sole discretion of the arbitrator to decide the venue of the arbitration. (iv) The fees, if any, of the arbitrator shall, if required to be paid before the award is made and published, be paid half and half by each of the parties. (v) Pursuant to the letter of intent of appointment of the sole arbitrator Sri Saurabh Tyagi, Chief Engineer(E) BSNL Electrical Zone, Meerut, U.P. by the Respondents, the proposed arbitrator very fairly disclosed his relationship with the Respondent as noted above and also requested the parties to furnish their unconditional no objection certificate. (vi) Petitioner through his letter dated 9.12.2016 furnished unconditional no objection certificate (Annexure-10) leaving no doubt in their mind about the independence or impartiality of Sri Saurabh Tyagi to be appointed as sole arbitrator and also about his ability to devote sufficient time to the arbitration proceedings and deliver the award within a period of 12 months. Similarly the Respondents have also furnished their undertaking by letter dated 7.12.2016, which is Annexure-R/5. (vii) Though in terms of Section 12(5) of Amendment Act, parties would have been required to appoint a neutral arbitrator as per the terms of the arbitration clause 25 but petitioner furnished unconditional no objection certificate on the vital issues of independence and impartiality of the proposed arbitrator through letter dated 9.12.2016. Respondents also have explicitly conveyed their intention to enter into agreement in terms of proviso to Section 12(5) of the Act as asked for by the petitioner. 9. The only hitch on which the petitioner has refrained from subjecting himself to the arbitration proceedings is in relation to the fees and expenses of the arbitration proceedings and its venue. He also insisted upon continuation of the Arbitration after his retirement. The terms and conditions under clause 25 agreed between the parties clearly provide that fees and expenses of the proceedings, if any, are to be borne equally by both the parties. The venue of the arbitration would also be within the sole discretion of the arbitrator. He also insisted upon continuation of the Arbitration after his retirement. The terms and conditions under clause 25 agreed between the parties clearly provide that fees and expenses of the proceedings, if any, are to be borne equally by both the parties. The venue of the arbitration would also be within the sole discretion of the arbitrator. As a matter of fact, though the arbitration clause permitted Respondent to appoint an employee of BSNL who may have been connected with the works executed under the agreement, but in their wisdom they have chosen to appoint an Officer who is unconnected with the matter and stationed at Meerut. Petitioner by furnishing his unconditional no objection certificate in relation to the independence and impartiality of the proposed arbitrator i.e. his neutrality and the Respondents also having furnished similar undertaking have in fact waived the requirement of a formal express agreement in terms of Section 12(5) of the Act, though respondents appear to be ready for execution of such formal agreement even now. Petitioner on the other hand has no legal basis to insist that the said Arbitrator should continue even after his retirement. 10. Waiver is a intentional relinquishment of known rights. In the given facts and circumstances, petitioner cannot even allege that he had no knowledge of his rights or of the facts enabling him to take effectual action for enforcement of such rights where the plea of lack of waiver may have been taken on his part. Reliance may be placed upon a judgment rendered by the Hon'ble Supreme Court in the case of Associated Hotels of India Limited v. S.B. Sardar Ranjit Singh reported in AIR 1968 SC 933 . Petitioner by furnishing unconditional no objection certificate has with full knowledge and consciousness waived his objection to the appointment of Sri Saurabh Tyagi as arbitrator to adjudicate the dispute between the parties even if he was regular employee of the Respondent BSNL. As a matter of fact, the sole arbitrator Sri Saurabh Tyagi after having received the unconditional no objection certificate from both the parties has also entered into reference as is evident from his communication dated 31.1.2017 11. In such circumstance I am of the view that prayer of the petitioner for appointment of an independent arbitrator is wholly unwarranted and rather misconceived. The instant application is accordingly dismissed.