Reacon Engineers (India) Pvt. Limited v. Union Of India
2018-09-05
I.P.MUKERJI
body2018
DigiLaw.ai
JUDGMENT : P. Mukerji, J. On the prayer of Mr.Tulsi Lall, on instructions, the application, CAN No.071 of 2018 is dismissed as not pressed. 2. Each of the other applications, CAN No.084 of 2018, CAN No.085 of 2018, CAN No.086 of 2018, CAN No.087 of 2018, CAN No.088 of 2018, CAN No.089 of 2018 and CAN No.090 of 2018, is disposed of by recording the very fair stand taken by Mr. Biswas for the petitioner that his client is not insisting on realization of costs imposed by the order dated 16th July, 2018. Re: AP No.012 of 2018, AP No.013 of 2018, AP No.014 of 2018, AP No.015 of 2018, AP No.016 of 2018, AP No.017 of 2018 and AP No.018 of 2018. 3. The agreement between the parties is governed by the General Conditions of Contracts of Military Engineering Services. The material part of clause 70 is as follows:- "70. Arbitration: All disputes, between the parties to the contract (other than those for which the decision of the C.W.E. or any other person is by the Contact expressed to be final and binding) shall, after written notice by either party to the Contact to the other of them, be referred to the sole arbitration of a [Serving Officer having degree in Engineering or equivalent or having passed final/direct final Examination of sub-Division II of Institution of Surveyor (India) recognised by the Govt. of India) to be appointed by the authority mentioned in the tender documents. Unless both parties agree in writing such reference shall not take place until after the completion or alleged completion of the works or termination or determination of the Contract under Condition Nos.55, 56 and 57 thereof." 4. After coming into force of the recent amendments to the Arbitration and Conciliation Act, 1996, a serving officer of the Army can not act as an arbitrator (see Section 12(5) read with the Seventh Schedule). Mr.Biswas submits and very rightly so that by operation of law the said part of the arbitration agreement has become void. 5. However, Mr.Tulsi Lall for the respondent argues that an arbitrator has to possess the qualifications mentioned in that clause. In that clause it is stated that the arbitrator should have a degree in engineering or equivalent.
Mr.Biswas submits and very rightly so that by operation of law the said part of the arbitration agreement has become void. 5. However, Mr.Tulsi Lall for the respondent argues that an arbitrator has to possess the qualifications mentioned in that clause. In that clause it is stated that the arbitrator should have a degree in engineering or equivalent. Learned counsel also submits that this Court should consider section 11(8) of the said Act which mandates that the Court should have due regard to the qualifications of the arbitrator as mentioned in the agreement. 6. To my mind, the principles applicable to this case are similar to those in Datar Switchgears Ltd. v. Tata Finance Ltd. and another reported in (2000) 8 SCC 151 and Punj Lloyd Ltd. v. Petronet MHD Ltd. reported in (2006) 2 SCC 628 , Deep Trading Company v. Indian Oil Corporation and others reported in (2013) 4 SCC 35 . Once by operation of law, the respondent could not appoint a serving officer as an arbitrator, they could be said to have lost their right to appoint an arbitrator. In that case the Court has the power to appoint an arbitrator. It is not bound by the procedure or terms of the arbitration clause e.g. qualification of the arbitrator stipulated in the agreement. 7. Chief Justice v. Sirpurkar in M/s Shankar Traders v. Union of India and others reported in AIR 2006 Calcutta 335, following the above decision of the Supreme court remarked: "....Further it is obvious that then even the recourse to the clauses of the agreement in respect of the procedure for appointing the arbitrator cannot be taken." "... In my view the wording of Section 11 (6) of the Act cannot be narrowly interpreted and secondly. I would hold that the Chief Justice would have the discretion to appoint the arbitrator as per his own choice in his own discretion. 7.1 There would be one other way of looking at this problem.
In my view the wording of Section 11 (6) of the Act cannot be narrowly interpreted and secondly. I would hold that the Chief Justice would have the discretion to appoint the arbitrator as per his own choice in his own discretion. 7.1 There would be one other way of looking at this problem. If the interpretation as suggested by the counsel for the railways is accepted and if it is to be held that the Chief Justice has no discretion in the matter and has to stick to the arbitration agreement then the party to the agreement would not be required to act at all in pursuance of the notice sent to it for appointment of an arbitrator because even the other party is required to go on account of the default of the other party to the Chief Justice under Section 11 (6) of the Act, the same results would have to ensure. Then the Chief Justice would have to again direct the parties to act in terms of the agreement. One party to the agreement would in such case have an unfair advantage on the other in the sense that it would be possible for such a party to take advantage of its own default. The defaulting party is likely to perpetrate the dispute or gain the time and thus would be able to steal an unfair advantage over the other sheerly by committing default by not acting in terms of the notice sent to it by the opposite party. Such cannot be the interpretation of Section 11 (6). The learned Judge of the Madras High Court [M/s. Kamala Solvent v. Manipal Finance Corporation Ltd. ( AIR 2001 Mad 440 ) (supra)] Kerala High Court [M/s. Bel House Associate Pvt. Ltd. v. GM, Southern Railway ( AIR 2001 Ker 163 ) (supra)] and Madhya Pradesh High Court [M/s. Subhas Projects & Marketing Ltd. v. South Eastern Coal Fields Ltd. ( AIR 1998 MP 276 (supra)] have not considered this particular angle. It would be for the Chief Justice to consider as to whether the party which was supposed to take action as per the notice has gained unfair advantage over the other sheerly by committing default in spite of services of the notice by the other party.
It would be for the Chief Justice to consider as to whether the party which was supposed to take action as per the notice has gained unfair advantage over the other sheerly by committing default in spite of services of the notice by the other party. The Chief Justice may feel that way and would be perfectly within his right to appoint an independent arbitrator ignoring the procedure in the agreement." 8. In AP No.006 of 2017 [REACON Engineers (India) Pvt. Ltd. v. The Union of India] in a section 11 application where disputes between the parties were similar, this Court on 6th July, 2018 had appointed Mr.Mohammed Tabraiz, Advocate as the sole arbitrator. 9. This Court was minded to appoint Mr. Tabraiz as arbitrator in each of the above arbitration applications but it is objected to by Mr. Tulsi Lall, on instructions. 10. Since the respondent does not agree to the appointment of Mr.Tabraiz, an arbitrator in these matters, the following appointments are made:- 11. The Hon'ble Mr. Justice Ashim Kumar Banerjee, a former Judge of this Court is appointed Arbitrator in AP No.012 of 2018, Mr. Pradeep Sancheti, Advocate of 12 Old Post Office St, 2nd Floor Kolkata-1 is appointed Arbitrator in AP No.013 of 2018, The Hon'ble Mr. Justice Ashok Das Adhikari, a former Judge of this Court is appointed Arbitrator in AP No.014 of 2018, The Hon'ble Mr. Justice Shyamal Chakraborty, a former Judge of this Court is appointed Arbitrator in AP No.015 of 2018, The Hon'ble Mr. Justice Raghunath Ray, a former Judge of this Court is appointed Arbitrator in AP No.016 of 2018, Mr. Debal Kumar Banerji, Sr. Advocate is appointed Arbitrator in AP No.017 of 2018, and Mr. Rajiv Lall, Advocate of 4 KS Road, Ground Floor Kolkata is appointed Arbitrator in AP No.018 of 2018. 12. Each of the Arbitrators will be paid remuneration in terms of the directions made and principles laid down in the order dated 6th July, 2018 in AP No.006 of 2017. 13. Each of the Arbitrators will adjudicate upon the disputes between the parties that have arisen out of the subject agreement and those that are likely to arise upon filing of the claim and counter-claim by the parties. 14.
13. Each of the Arbitrators will adjudicate upon the disputes between the parties that have arisen out of the subject agreement and those that are likely to arise upon filing of the claim and counter-claim by the parties. 14. The above Section 11 arbitration applications AP No.012 of 2018, AP No.013 of 2018, AP No.014 of 2018, AP No.015 of 2018, AP No.016 of 2018, AP No.017 of 2018 and AP No.018 of 2018 and the connected applications CAN No.084 of 2018, CAN No.085 of 2018, CAN No.086 of 2018, CAN No.087 of 2018, CAN No.088 of 2018, CAN No.089 of 2018 and CAN No.090 of 2018 are disposed of by this order.