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2018 DIGILAW 2819 (JHR)

Modi Projects Limited v. East Central Railway Through General Manager (engg )

2018-12-20

APARESH KUMAR SINGH

body2018
JUDGMENT Aparesh Kumar Singh, J. - Heard learned counsel for the petitioner and the Railways. Petitioner has approached this Court for appointment of an independent arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 as amended invoking Clause 63 and 64 of the General Conditions of Contract 2008 read with Clause 47 of the Agreement dated 11.02.2014. 2. After taking note of the case set up by the petitioner, the Respondents were asked to file detailed affidavit. The order dated 03.08.2018 reads as under: "Under Tender Notice no. 22 of 2013-14 (SLT)/South in and Tender no. 79 of 2013-14 (SLT)/South for the work of construction of balance foundation and substructure works and erection of steel superstructure of major bridge at Km 119.255 in HazaribagBarkakana Section in connection with construction of new B. G. Railway line from Koderma to Ranchi, offer of the petitioner submitted on 4th October, 2013 was accepted by the Chief Administrative Officer/Con/South, East Central Railway at the rates quoted by the petitioner at a total cost of Rs. 17,63,74,167.96 vide letter dated 20th November, 2013 (Annexure-1) issued by Chief Engineer/Con/ South, East Central Railway. Petitioner claims to have executed the work in the extended time and sought release of Performance Bank Guarantee through letter dated December, 10, 2016 (Annexure-10). The formal agreement was also entered on 11th February, 2014 (Annexure-2) which amongst other, also contains an arbitration Clause No. 47. The disputes of any kind whatsoever arising out of or in connection with the contract, whether during the progress of work or after its completion and whether before or after the determination of the contract are to be referred by the contractor to the Railway and are to be dealt with under Clause 63 to 64(7) of General Condition of Contract, 2008. The contractor is required to submit his final claim within 30 days of determination of contract to which Railway shall reply within 120 days after receipt thereof stating whether all/any of such claims fall under expected matters under Clause 63 of General Condition of Contract or not. Arbitration can be demanded only for claims not falling under expected matters in which case decision of Railways would be final and binding on the contractor. Learned counsel for the petitioner has referred to Clause 63 to 64(7) under Settlement of Disputes-Indian Railway Arbitration Rules (Annexure-3). Arbitration can be demanded only for claims not falling under expected matters in which case decision of Railways would be final and binding on the contractor. Learned counsel for the petitioner has referred to Clause 63 to 64(7) under Settlement of Disputes-Indian Railway Arbitration Rules (Annexure-3). He has contended that it was only under this provision that due notice was given to the Railways through letter dated 10th December, 2016 and thereafter on 30th June, 2017 (Annexure-11) containing the submission of Final Account/Claims which remain unresponded. Since the respondents failed to reply in 120 days, petitioner invoked the arbitration clause through letter dated 15th November, 2017 (Annexure-12) for appointment of an independent Arbitrator. Railways have not responded thereto also. Therefore, petitioner has approached this Court for appointment of an independent arbitrator. Respondents have filed perfunctory counter affidavit earlier on 27th June, 2018. However, learned counsel for the Railways prays for and is allowed further 3 weeks'' time to file a detailed counter affidavit positively. Accordingly, list it after 3 weeks. 2. Thereafter a supplementary affidavit has been filed on 25.09.2018. Learned counsel for the Respondent has referred to the details of the work allotted to the petitioner for construction of balance foundation and substructure work and erection of steel superstructure of major bridge at Km 119.255 at the given site in Hazaribag Barkakana Section in connection with the construction of new broad gauge railway line at a total cost of Rs.17,63,74,167.96/-. It further contends that work was to be completed in all respect in terms of the agreement within 6 months from the date of letter of acceptance by the applicant i.e., by 19.05.2014. Petitioner has prayed for appointed of an arbitrator on the basis of letter dated 30.09.2017 and 15.11.2017, annexure-11 and 12 respectively of the application. A plea has been taken that these letters were addressed to the General Manager (Engineering) i.e., not in conformity with clause 63 of the General Condition of Contract. He submits that General Manager (Engineering) is a different entity who does not have power to appoint an arbitrator. Clause 63 has been specifically relied upon. Respondents have further contested the statements made para 2 to 37 and 40 to 53 of the application at para 16 of the counter affidavit asking the applicant/ petitioner to strict proof. Respondents have however not offered any specific answer to those paras. 3. Clause 63 has been specifically relied upon. Respondents have further contested the statements made para 2 to 37 and 40 to 53 of the application at para 16 of the counter affidavit asking the applicant/ petitioner to strict proof. Respondents have however not offered any specific answer to those paras. 3. Petitioner in his rejoinder has taken a categorical plea at para 5 that there is one General Manager of East Central Railways who the petitioner had approached i.e., the General Manager(Engineering) East Central Railways, Diggikalan, Hajipur. The term ''Engineering'' was used because the work fell within the civil engineering work and there is one General Manager under that Zone. He further refers to Clause 1(b) of the Standard General Condition of the Contract, which defines the expression ''General Manager'' as Officer-In Charge of the General Superintendence and Control of the Railways and shall also include the General Manager (construction) and shall mean and include their successors or the successor railways. According to the petitioner, the definition is not exclusive and shall mean General Manager (Engineering) also. 4. Learned counsel for the Respondent submits that the definition clause is under Part II of the ''Standard General Conditions of Contract for Use In Connection With Engineering Works'' (Annexure-2). It also provides that definition there under shall have the meaning assigned except where the context otherwise requires. He intends to convey that use of expression ''General Manager in Clause 63 falls under the exception. The existence of the office of a General Manager and whether there are other General Managers in the said Zone with specific nomenclature as ''Engineering'', ''Personnel'' or ''Commercial'' etc. or not was asked to be clarified by the Respondents. By way supplementary counter affidavit filed on 14.12.2018, Respondents have stated that in each zone there are number of departments for assisting the General Manager by custom and not by rule. All such department head is denoted with designation like ''General Manager (Engineering), ''General Manager (Personnel)'', ''General Manager (Commercial) etc., who are junior to the General Manager and work under his control and supervision. Therefore it is incorrect to equate the General Manager (Engineering) with General Manager. Respondents however do not specifically deny averments made in para 5 of the rejoinder where specific statement has been made that there is only one office of the rank of General Manager in the said zone. Therefore it is incorrect to equate the General Manager (Engineering) with General Manager. Respondents however do not specifically deny averments made in para 5 of the rejoinder where specific statement has been made that there is only one office of the rank of General Manager in the said zone. Learned counsel for the respondent also does not dispute that there are no other officer in the rank of General Manager with specific designation ''Engineering'', ''Personnel'' or ''Commercial in the said zone at Hajipur. This is broadly the stand of the respondents to traverse the prayer of the petitioner for appointment of an independent arbitrator. 5. I have considered the submission of learned counsel for the petitioner and the Railways and relevant materials on record also taken note above. Respondents have not furnished a specific denial or reply to the averments made by the applicant / petitioner in respect of the dispute raised in execution of the work allotted to him under the Tender Notice no.2 of 2013-14(SLT)/ South and Tender Notice no.79 of 2013-14 (SLT)/South. Petitioner claims to have executed the work in the extended time and sought release of the performance bank guarantee through letter dated 10.12.2016. It also claims to have submitted final claim for determination of the contract through letters dated 10.12.2016 and 30.06.2017, which remained unresponded. Petitioner has also enclosed the report of service of notice through speed post at page 92 of the application i.e,, the legal notice dated 15.11.2017 (Annexure-12) for appointment of an independent arbitrator addressed to the General Manager, ''Engineering'', East Central Railway, Hajipur. The receipt of the notice enclosed at page 92 thereof shows delivery on 20.11.2017 at Hajipur Head Office. Denial of receipt of notice therefore cannot be accepted. It is also not in dispute that there is an office of General Manager at Hajipur Zone and no other office of General Manager (Engineering). 6. The Standard General Condition of Contract provided for the definition of the ''General Manager'' at Clause 1(b) which reads as under: "General Manager" shall mean the Officer-in-charge of the General Superintendence and Control of the Railway and shall also include the General Manager (Construction) and shall mean and include their successors of the successive Railway. 6. The Standard General Condition of Contract provided for the definition of the ''General Manager'' at Clause 1(b) which reads as under: "General Manager" shall mean the Officer-in-charge of the General Superintendence and Control of the Railway and shall also include the General Manager (Construction) and shall mean and include their successors of the successive Railway. Under Clause 63 'General Manager'' has been used in a generic sense which has been defined in the definition clause quoted above and also includes General Manager "Construction" and their successor. The expression General Manager ''Engineering'', ''Personnel'' or ''Commercial'' are used by way of custom and not by way of rule as per the stand of the respondents noted above. Nature of the work under the agreement is for construction of balance foundation and substructure work and erection of steel superstructure of major bridge at Km 119.255 at the specific site in Hazaribag Barkakana Section in connection with the construction of new broad gauge railway line from Koderma to Ranchi. 7. The service of notice, pre-requisite for invoking the jurisdiction of the Court under Section 11(6) of the Act of 1996 therefore appears to have been satisfied. Respondents have failed to appoint an arbitrator within time stipulated despite receipt of such notice. There appears to be an arbitrable dispute between the parties which has not been specifically denied by the respondents through their counter affidavits. In these circumstances, this Court is satisfied that the ingredients of Section 11(6) of the Act of 1996 has been fulfilled by the petitioner to seek appointment of an independent arbitrator under Clause 63 and 64 of the General Conditions of Contract 2008 read with arbitration clause 47 of the formal agreement dated 11.02.2014. As such, this Court proposes to appoint Hon''ble Mr. Justice Anil Kumar Sinha (Retd.) former Judge of this Court, resident of Sahay Compound, Tharpakhna, Ranchi bearing mobile no. 9431107552 as an arbitrator to adjudicate the dispute between the parties. Proposed arbitrator is required to submit a declaration in terms of Section 12 of the Act of 1996 as amended. Let a copy of the order be communicated to the proposed arbitrator. 8. Let the matter be placed on 24.01.2019 with the declaration of the proposed arbitrator, if any.