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Tripura High Court · body

2018 DIGILAW 281 (TRI)

Ashes Deb v. State of Tripura, Represented by its Secretary & Commissioner, Public Works Department

2018-10-05

AJAY RASTOGI

body2018
JUDGMENT : The instant batch of arbitration petitions are filed u/Sec. 11(6) read with Sec.12 of the Arbitration & Conciliation Act, 1996 on the self same question of law and facts and with consent of the parties are being disposed of by a present order. The facts are being noticed with consent of the parties from Arb. P. No. 06 of 2018. 2. The facts in brief which may a relevant for the purpose are that a contract for execution of work namely Up-gradation of Shishu Bihar H.S. School, Agartala, under ACA/Construction of School building including internal water supply and sanitary installation was executed between the parties with the work order issued to the petitioner dt. 27th July, 2009. In terms of the work order dt. 27th July, 2009 as alleged, the petitioner proceeded to perform the work in terms of the conditions of agreement and certain disputes arose under the terms and conditions of the contract and to resolve such arbitral disputes, a prayer was made to the respondent No. 4 on 21st August, 2015 for appointment of an arbitrator in terms of Clause-22 of the agreement. 3. It may be appropriate to quote the extract of Clause-22 settlement of disputes failing which, be settled by an arbitrator who shall conduct the proceedings in accordance with the provisions of Indian Arbitration and Conciliation Act, 1996 (Act, 1996) or any other statutory modifications thereof. “22. Settlement of disputes: 22.1. If any dispute or difference of any kind whatsoever arises between the department and the contractor in connection with, or arising out of the contract at stage, whether during the progress of the works or after their completion and whether before or after the termination, abandonment or breach of the contract, it shall in the first place, be referred to and settled by the Engineer-in-charge who shall, within a period of twenty days after being requested by the contractor to do so, give written notice of his decision to the contractor. Upon receipt of the written notice of the decision of the Engineer-in-charge the contractor shall promptly proceed without delay to comply with such notice of decision. 22.2. Upon receipt of the written notice of the decision of the Engineer-in-charge the contractor shall promptly proceed without delay to comply with such notice of decision. 22.2. If the Engineer-in-charge fails to give notice of his decision in writing within a period of twenty days after being requested or if the contractor is dissatisfied with the notice of the decision of the Engineer-in-charge, the contractor may within fifteen days after receiving the notice of decision appeal to the concerned Superintending Engineer of Department who shall after affording opportunity of being heard shall give notice of his decision within a period of thirty days. After Superintending Engineer has given written notice of this decision to the contractor and no claim to arbitration, has been communicated to him by the contractor within a period of fifteen days from receipt of such notice the said decision shall remain final and binding on both side. If the Superintending Engineer fails to give notice of his decision, as aforesaid within a period of thirty days after being requested as aforesaid, or if the contractor be dissatisfied with any such decision, then and in any such case the contractor within thirty days after the expiration of the first named period of thirty days as the case may be, require that the matter or matters in dispute be referred to arbitration as detailed below: Settlement of claims: All disputes or difference arising of or relating to the contract shall be referred for the adjudication as follows: (a) Claims up to a value of Rupees 50,000/- Superintending Engineer of another circle in the same department. (b) Claims above Rs. 50,000/- Another Chief Engineer or Arbitrator appointed by the Chief Engineer of the same department. The arbitration shall be conducted in accordance with the provision of Indian Arbitration and Conciliation Act, 1996 or any statutory modification thereof.” 4. Pursuant to the letter of the petitioner dt. 21st August, 2015 for appointment of an arbitrator, the authority under its order dt. 9th September, 2015 appointed the arbitrator (Annexure-3). In furtherance thereof, the arbitrator entered into reference consequent thereto, the petitioner filed his statement of claim. The proceeding drawn thereafter by the arbitrator appointed pursuant to order dt. 9th September, 2015, after filing of the statement of claim, has not been brought to the notice of the Court by either of the parties. 5. In furtherance thereof, the arbitrator entered into reference consequent thereto, the petitioner filed his statement of claim. The proceeding drawn thereafter by the arbitrator appointed pursuant to order dt. 9th September, 2015, after filing of the statement of claim, has not been brought to the notice of the Court by either of the parties. 5. That because untimely death of the arbitrator a letter was sent by the petitioner dt. 27th June, 2016 that in view of the amendments which have been made under the Indian Arbitration & Conciliation Act, 1996 w.e.f. 23rd October, 2015 to fill the vacancy so created on account of death of Sri Goswami by another person to be appointed as an arbitrator keeping in view the amendments made under the Act, 1996 w.e.f. 23rd October, 2015. 6. It may be relevant to note that the petitioner has not made a reference of the arbitrator who has been subsequently in terms of Clause-22.2 of the agreement vide order dt. 1st July, 2016 and either of the parties has not informed about the stage of pending proceedings with the arbitrator who has been appointed under order dt. 1st July, 2016. 7. Counsel for the petitioner submits that in view of the amendment which has been made under the Act, 1996 effective from 23rd October, 2015 the arbitrator who has been appointed vide order dt. 1st July, 2016 is in clear violation of Sec. 12(5) of the amendment Act, 2015 effective from 23rd October, 2015 and further submits that the Chief Engineer who has been entrusted with a power to appoint an arbitrator under Clause-22 of the agreement has become ineligible by operation of law and the person who is ineligible under the law cannot nominate or substitute an arbitrator as contained in Sec.12(5) of the Act and has prayed that this Court may appoint a sole arbitrator u/Sec.11(6) of the Act, 1996. In support of submission counsel placed reliance on a judgment of the Apex Court in TRF limited v. Energo Engineering Projects Limited, reported in (2017) 8 SCC 377 and the judgment of the High Court of Rajasthan in S. B. Arbitration Application No. 16 of 2015, Maya Construction Pvt. Ltd. v. Union of India & Ors., decided on 14.07.2017. 8. In support of submission counsel placed reliance on a judgment of the Apex Court in TRF limited v. Energo Engineering Projects Limited, reported in (2017) 8 SCC 377 and the judgment of the High Court of Rajasthan in S. B. Arbitration Application No. 16 of 2015, Maya Construction Pvt. Ltd. v. Union of India & Ors., decided on 14.07.2017. 8. Counter affidavit has been filed by the respondents and opposing the request made by the petitioner for appointment of an arbitrator u/Sec. 11(6) of the Act, 1996 and in support of defence, it has been averred that an arbitral proceedings stood commenced immediately on the request being made by the petitioner for resolving a arbitral dispute by invoking the mechanism envisaged under Clause-22 of the agreement. In the first instance on request dt. 21st August, 2015 the Chief Engineer made an appointment of an arbitrator under its order dt. 9th September, 2015 and the arbitral proceedings indeed commenced prior to the amendment made effective w.e.f. 23rd October, 2015, stood saved by virtue of Sec.26 of the amendment Act which starts with non-obsententive clause saving such arbitral proceedings commenced in terms of Sec.21 of the principal Act provided, the party otherwise agreed and amendment shall apply in relation to arbitral proceedings commenced or after the date of commencement of the Amendment Act came into force w.e.f. 23rd October, 2015. 9. In support of submission, counsel for the respondents submits that once the arbitral proceedings stood commenced as envisaged u/Sec. 21 of the Act, 1996 have been saved by virtue of Sec.26 of the amendment Act, 2015 effective from 23rd October, 2015, in the given circumstances the present application filed by the petitioner for appointment of a sole arbitrator u/Sec. 11(6) of the Act. 1996 is not maintainable and deserves rejection. 10. I heard counsel for the parties and with their assistance perused the material available on records and the provisions to appreciate the change in the fundamental concept of amendments which have been made under Act, 1996 w.e.f. 23rd October, 2015. 11. 1996 is not maintainable and deserves rejection. 10. I heard counsel for the parties and with their assistance perused the material available on records and the provisions to appreciate the change in the fundamental concept of amendments which have been made under Act, 1996 w.e.f. 23rd October, 2015. 11. It is not disputed that under the terms and conditions of contract executed between the parties it contains Clause-22 for settlement of disputes and in the first instance if the dispute could not resolve, the mechanism has been provided under Clause-22.1 and 22.2 to the party to ask for appointment of an arbitrator who shall conduct the proceedings under the provisions of Indian Arbitration & Conciliation Act, 1996 or any statutory modifications made thereof. 12. In the instant case, indisputedly the dispute arose under the terms and conditions of the agreement executed between the parties and the arbitral dispute indeed was to resolve through an arbitrator as per the mechanism provided under Clause-22.2 of the agreement and after the letter was sent by the petitioner for appointment of an arbitrator dt. 21st August, 2015, the respondents vide its order dt. 9th September, 2015 appointed the sole arbitrator to resolve the arbitral disputes, but because of his sad demise, he was later substituted vide order dt. 1st July, 2016. 13. Before passing of the order dt. 1st July, 2016, records reveals that a letter was sent by the petitioner on 27th June, 2016 (Annexure-4) for filling the vacancy so created on account of the death of the sole arbitrator who was earlier appointed vide order dt. 9th September, 2015, keeping in view the spirit of the Amendment Act, 2015 as amended w.e.f. 23rd October, 2015 and that gives a cause to the petitioner to file an application u/Sec.11(6) read with Sec.12 of the Act to appoint a sole arbitrator under the Act, 1996. 14. I had taken note of the relevant provision of the Act, 1996, it reveals that the arbitral proceeding stands commenced, the date on which a request for that dispute to be referred to arbitration is received by the respondents as envisaged u/Sec.21 of Act, 1996 and to make the arbitral mechanism fair, efficient & transparent and to minimize the supervisory role of Court’s over the arbitral process and for settlement of disputes. The amendments were made under the Act, 1996 w.e.f. 23rd October, 2015 and the law makers in its wisdom was conscious on this fact that it should not interfere with the arbitral proceedings which had already commenced on the date of amendments made effective and all such pre-amended arbitral proceedings initiated prior thereto stood saved by virtue of Sec.26 of the amendment Act, 2015. For the purpose of reference extract is quoted ad-infra: “21. Commencement of arbitral proceedings: Unless otherwise, agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. 26. Act not to apply to pending arbitral proceedings- Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of Section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act.” 15. On a conjoint reading of Sec.21 of the Act, 1996 and Sec. 26 of the amendment Act, 2015 which has came into force w.e.f. 23rd October, 2015, it is manifestly clear that such of the arbitral proceedings which has commenced in terms of Sec.21 of the Act before the amendment Act, 2015 came into force w.e.f. 23rd October, 2015, all such arbitral proceedings have been saved and will be dealt with in accordance with the Pre-amended provision of the Act, 1996 in view of Sec. 26 of the Act, 2015. 16. In the instant case, indiaputedly the proceedings stood commenced as envisaged u/Sec.21 of the Act much before the amendment Act, 2015 came into force w.e.f 23rd October, 2015 and to be made further clear that the arbitrator was appointed by the respondents on 9th September, 2015 before the amendment has came into force and the later development has taken place on account of the death of the arbitrator appointed vide order dt. 9th September, 2015, having substituted by the respondents vide its order dt. 1st July, 2016 would not entail a fresh proceeding or to be treated to be the proceedings commenced after the amendment Act, 2015 has came into force w.e.f. 23rd October, 2015 in view of Sec.21 of the Act, 1996. 17. 9th September, 2015, having substituted by the respondents vide its order dt. 1st July, 2016 would not entail a fresh proceeding or to be treated to be the proceedings commenced after the amendment Act, 2015 has came into force w.e.f. 23rd October, 2015 in view of Sec.21 of the Act, 1996. 17. In the considered opinion of this Court, the proceedings stood commenced, in the instant case when the letter dt. 21.08.2015 came to be served in the office of the respondent and pursuant thereto arbitrator was appointed vide order dt.09.09.2015 much before the amendment Act, 2015 came into force form 23rd October, 2015 and in terms of Sec.21 of the Act, 1996, all such arbitral pending proceedings stood saved by virtue of Sec.26 of the amendment Act, 2015 and in the given circumstances, the application which has been filed by the petitioner for appointment of an arbitrator u/Sec.11(6) of the Act, 2015 on the premises that the person authorized to appoint an arbitrator has become ineligible by operation of law in view of the amendment made effective from 23rd October, 2015, in the given facts and circumstances is wholly without substance and deserves rejection. 18. The judgment on which the petitioner placed reliance in TRC Ltd. v. Energo Engineering Projects Limited & Ors., it was a case where the arbitral proceeding could commenced in terms of Sec.21 of the Act on a letter being sent by the party on 28th December, 2015 to invoke the arbitration in terms of Clause-33 of the terms & conditions of the purchase order for making a reference to the arbitrator, indisputedly after the amendment Act, 2015 became effective from 23.10.2015 and such actions have not been saved u/Sec.26 of the amendment Act, 2015 and the proceedings which was commenced after the amendment Act, 2015 became effective arbitrator has to be appointed who may not hold any disqualification as contemplated u/Sec. 12(5) of the Act, 1996. 19. 19. Further submission of the counsel for the petitioner to support submission in view of Sec.12(5) which has been added by an amendment Act, 2015 from 23rd October, 2015 is also without substance for the reason that where the arbitral proceedings has commenced after the amendment Act, 2015 all actions in furtherance thereof, has to be in accordance with Sec.12(5) of the Act, 2015 keeping in view the disqualifications and the conflict of interest of the parties in appointing the arbitrator as mandated u/Sec.12(5) added with the Schedule-7 annexed thereto has to be kept in mind while making appointment of an arbitrator in resolving the arbitral dispute and the judgment on which the petitioner place reliance of the High Court of Rajasthan Bench at Jaipur may not be applicable and of no assistance in the fact and circumstances of the case which has been discussed by me in detail. Consequently, in my considered view the present batch of arbitration applications are without substance and accordingly dismissed. No costs.