Research › Search › Judgment

Gauhati High Court · body

2017 DIGILAW 701 (GAU)

Concast Steel and Power Ltd. v. State of Assam

2017-05-31

A.K.GOSWAMI

body2017
JUDGMENT AND ORDER : Arup Kumar Goswami, J. Heard Mr. S. Khound, learned counsel for the petitioners. Also heard Mr. B. Gogoi, learned standing counsel, Health and Family Welfare Department appearing for the respondent Nos. 1 to 6. 2. The Mission Director, National Health Mission, Assam invited bids from interested bidders to carry out construction of Sub-Centres with Pre-fabricated steel structure, brick work in foundation, 112 mm thick brick walling at various places of Assam under NRHM on turn-key basis and on two bid system. 3. The petitioners submitted tenders and finding the bids of the petitioners responsive, issued the letters of acceptance in respect of NRHM-NSC (2012-2013)-"D" (73 Nos. SC in Tinsukia, Dibrugarh, Sivasagar, Golaghat and Jorhat Dist.) and NRHM-NSC(2012-2013)-"G" (93 Nos. S.C. in Nalbari, Barpeta, Kamrup (R) Dist.). 4. The acceptance letter in respect of 93 numbers of sub-centre was issued on 21.2.2014 and that of 73 numbers on 5.2.2014. 5. Arbitration Petition No. 33/2016 is filed in connection with 73 numbers of sub-centres and Arbitration Petition No. 36/2016 is filed in connection with 93 numbers of sub-centres. 6. The letter of acceptance in both the cases provides for an arbitration clause, which is clause 20. 7. The letter of acceptance, which is also interchangeably termed as work order was cancelled in respect of 93 numbers of sub-centres by an order dated 9.11.2015 issued by the respondent No. 3. Similar cancellation order was issued in respect of 73 numbers of sub-centres on 28.12.2015. 8. The petitioners had filed the two writ petitions challenging the orders dated 9.11.2015 and 28.12.2015, which were registered as WP(C) No. 1309/2016 and WP(C) No. 1137/2016, respectively. Both the cases were disposed of on withdrawal by separate orders passed on 9.3.2016 in order to enable the petitioners to avail alternative remedy. Admittedly, the alternative remedy available to the petitioners is the mechanism of arbitration as provided in the letter of acceptance. 9. The petitioners prayed for appointment of sole arbitrator vide letters dated 10.5.2016 in Arb. Pet. No. 36/2016 and on 5.8.2016 in Arb. Pet. No. 33/2016. 10. No response having been forthcoming, these two arbitration petitions have been filed under Section 11 of the Arbitration and Conciliation Act, 1996, for short, the 1996 Act. 11. Affidavit-in-opposition is filed by the respondent No. 3 in both the petitions. 12. Mr. Pet. No. 36/2016 and on 5.8.2016 in Arb. Pet. No. 33/2016. 10. No response having been forthcoming, these two arbitration petitions have been filed under Section 11 of the Arbitration and Conciliation Act, 1996, for short, the 1996 Act. 11. Affidavit-in-opposition is filed by the respondent No. 3 in both the petitions. 12. Mr. Khound has submitted that in the affidavits, a plea is taken by the respondent No. 3 that after the termination of the contract there can be no question of appointment of arbitrator. According to him, the reason assigned is totally fallacious and cannot be sustained in view of the decision of the Supreme Court in the case of Reva Electric Car Co. (P) Ltd. v. Green Mobil, reported in (2012) 2 SCC 93 . 13. Mr. Gogoi, abiding by the stand taken in the affidavit, has submitted that when the contract agreement had been terminated, the very basis of the agreement for arbitration becomes non-est and therefore, the prayer for appointment of arbitrator is misconceived. 14. I have considered the submission of the learned counsel for the parties and have perused the materials on record. 15. In the affidavit it is stated that after termination of the contract, engagement of arbitrator does not arise. The idea that seems to be conveyed is that once the termination of contract takes place, necessarily the agreement for arbitration will cease to have operation and therefore, there cannot be any question of appointment of arbitrator to resolve any dispute between the parties. 16. The question that has arisen for consideration is as to whether the clause of arbitration embodied in a contract is distinct and separate from the contract agreement entered into by the parties. 17. Section 16(1) of the 1996 Act provides that the Arbitral Tribunal may rule on its own jurisdiction including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose,- (a) An arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and (b) A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. 18. 18. From the above, it is apparent that arbitration clause shall be treated independent of the other terms and conditions of the agreement which also includes provision for termination of contract. 19. The Supreme Court in Reva Electric (supra) had laid down that on termination of a contract arbitration clause would not cease to exist. 20. In view of the above, the plea raised by the respondents is answered in the negative. 21. It is also relevant to note that the seven-Judge Bench of the Supreme Court in M/s SBP and Co. v. M/s Patel Engineering Ltd. and Anr., reported in (2005) 8 SCC 618 , by a majority of 6:1, concluded that the power exercised by the Chief Justice of the High Court or the Chief Justice of India under Section 11(6) of the 1996 Act is not an administrative power. It is a judicial power. The Chief justice or the designated Judge will have the right to decide preliminary aspect: whether he has jurisdiction, whether there is an arbitration agreement, whether the applicant before him is a party, whether the conditions for exercise of the power is fulfilled and if arbitrator is to be appointed, who is the fit person. It is further held that Section 16 is a recognition of the principle of Kompetenz Kompetenz and that where the jurisdictional issues are decided under Section 8 and Section 11 of the 1996 Act, before a reference is made, Section 16 cannot be held to empower an Arbitral Tribunal to ignore the decision given by the judicial authority or the Chief Justice before the reference to it was made. The Arbitral Tribunal can decide on its jurisdiction only when parties had gone to the Arbitral Tribunal without recourse to either Section 8 or Section 11 of the 1996 Act. 22. Accordingly, I appoint Justice B.K. Sarma, a retired Judge of Gauhati High Court as the Arbitrator to decide the dispute between the parties. 23. The application stands disposed of.