Research › Search › Judgment

Himachal Pradesh High Court · body

2018 DIGILAW 562 (HP)

Gorsi Construction Private Limited v. State Of Himachal Pradesh

2018-04-06

VIVEK SINGH THAKUR

body2018
JUDGMENT Vivek Singh Thakur, J —This petition has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ''the Act'') for appointment of an Arbitrator to adjudicate upon the dispute between the parties relating to agreement No. 28 of 2014-15 executed between the parties with respect to the work of ''construction of link road Sub Head construction of traffic tunnel on RD 6/300 to 6/500'' and rain harvesting system, claiming that the State-respondents are not releasing the payment against the work executed and completed by the petitioner. Petitioner has also disputed the termination of the agreement. Petitioner has further claimed damages for omissions and commissions on the part of the State-respondents detailed in the petition. 2. Petitioner had requested the State-respondents to appoint Arbitrator for resolution of dispute between the parties arising out of the agreement executed between them vide letter, dated 3rd June, 2017. 3. According to petitioner, State-respondents had failed to appoint Arbitrator after receipt of notice/letter, dated 3rd June, 2017, constraining it to file the instant petition. 4. State-Respondents have contested this petition by stating that after receiving request of the petitioner, dated 3rd June, 2017, the Chief Engineer, Shimla Zone, HPPWD, vide his office order, dated 22nd June, 2017, has already appointed the Superintending Engineer, Arbitration Circle, HPPWD, Solan, as sole Arbitrator for adjudication of the dispute. 5. Execution of agreement having arbitration clause in it and dispute arising out of the said agreement between the parties is undisputed as after receiving request of the petitioner, State-respondents themselves have appointed Arbitrator for adjudication of the dispute. 6. Though, it has been stated in the reply that Arbitrator was appointed by the State-respondents on 22nd June, 2017, but, it is nowhere stated in the reply that the said appointment was ever conveyed to the petitioner. Copy of order, dated 22nd June, 2017, appointing the Arbitrator has been placed on record as Annexure R-1, wherein copy of the said order is recorded to have been forwarded for information and necessary action to Mr. Pramod Negi, Advocate, for the petitioner as well as to the petitioner through registered post, but there is no averment in the reply asserting and affirming the said fact or effecting service of the said order of appointment of Arbitrator upon the petitioner or its counsel, as claimed in Annexure R-1. 7. Pramod Negi, Advocate, for the petitioner as well as to the petitioner through registered post, but there is no averment in the reply asserting and affirming the said fact or effecting service of the said order of appointment of Arbitrator upon the petitioner or its counsel, as claimed in Annexure R-1. 7. Learned counsel for the petitioner submits that no such order/letter has ever been received either by Mr. Pramod Negi, Advocate, or by the petitioner. 8. Learned counsel for the petitioner further contended that in view of Section 12 (5) of the Act read with Seventh Schedule, Section 21 of the Act and Section 26 of the amending Act, 2015, appointment of Superintending Engineer, Arbitration Circle, HPPWD, Solan, as Arbitrator is not sustainable. 9. Learned Additional Advocate General appearing for the State-respondents submits that he has already brought the provisions of law to the notice of the respondent-department, but, thereafter, he has received the instructions from the department wherein it has been reasserted that State-respondents have appointed Superintending Engineer, Arbitration Circle, HPPWD, Solan, as a sole Arbitrator and the arbitration agreement, in present case, was executed before coming into force of the amending Act on 23rd October, 2015 and, therefore, provisions of Section 12 (5) , as amended, will not be applicable in the present case. Thus, under the instructions of the respondents, learned Additional Advocate General has insisted for continuation of Superintending Engineer, Arbitration Circle, HPPWD, Solan, as the sole Arbitrator to adjudicate the matter. 10. The Arbitration and Conciliation Amendment Act, 2015 has come into force with effect from 23rd October, 2015 whereafter, as per Section 12 (5) of the Act read with Seventh Schedule, an employee, consultant, advisor or a person having any other past or present business relationship with the party, a manager, a director or part of management or a person having similar controlling influence in affiliate of one of the parties, if the affiliate is directly or indirectly involved in the matter in dispute in arbitration, shall be ineligible to be appointed as an Arbitrator, provided that the parties, subsequent to the dispute having arisen between them, waive the applicability of sub-section (5) of Section 12 of the Act by an express agreement in writing. 11. 11. Section 26 of the amending Act unambiguously provides that the amendment carried out by way of this amending Act shall not apply to arbitral proceedings commenced 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, in accordance with the provisions of Section 21 of the principal Act. 12. Section 21 of the Act provides that 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. 13. Plain reading of aforesaid provisions of law, as applicable in the present case, clearly indicates that there is a complete non-application of mind on the part of the respondents. In present case, request for referring the matter to arbitration was made on 3rd June, 2017. Thereafter, it was received by the respondents and appointment of sole Arbitrator was made. Amending Act has come into force on 23rd October, 2015. The sole Arbitrator appointed by the respondents is an employee of respondents having direct relationship with one of the parties and the petitioner has not agreed even orally, much less, in writing for his appointment as an Arbitrator. Therefore, the Superintending Engineer, Arbitration Circle, HPPWD, Solan, is ineligible to be appointed and to act as an Arbitrator. Viewed thus, order, dated 22nd June, 2017, appointing Superintending Engineer, Arbitration Circle, HPPWD, Solan, as an Arbitrator (Annexure R-1) is quashed and set aside. 14. Despite adjourning the petition for a number of dates, no consensus has been arrived at between the parties to appoint the Arbitrator. Therefore, I appoint Hon''ble Mr. Justice Kuldip Singh, Judge (retired) , as an Arbitrator with a direction to enter into reference within a period of two weeks from receipt of this order and to make a reasoned speaking award in terms of arbitration agreement, in accordance with law, on the basis of material placed before him during proceedings. Learned Arbitrator shall be at liberty to fix his fee, in accordance with law. 15. Registry is directed to immediately supply copy of this order to Justice Kuldip Singh, Judge (retired.) 16. Petition is allowed in the aforesaid terms.