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Tripura High Court · body

2019 DIGILAW 31 (TRI)

Ashes Deb, Contractor, S/o. Late Amalendu Deb v. State of Tripura, represented by the Secretary & Commissioner

2019-04-20

SANJAY KAROL

body2019
JUDGMENT : 1. Present petition filed under Section 11(6) read with Section 12 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) as amended vide the Arbitration and Conciliation (Amendment) Act, 2015 notified on 23.10.2015 (hereinafter referred to as the Amendment Act), seeks appointment of an arbitrator for adjudication of disputes having arisen in connection with work order agreement dated 12.11.2014 entered into with the Executive Engineer, Longthorai Valley Division, Manu. 2. The nature of the work is defined as “Replacement of Bailey Bridge by RCC Bridge (Length 56.00 meters) over river Chailengta at Ch. 0.50 km on Chailengta-Chawmanu Road sanctioned for implementation under NABARD (RIDF-XIX), Job No.TP/COM/09/ 2013-2014”. 3. Clause-22 of the agreement deals with settlement of disputes, relevant portion thereof is reproduced as under: “22. Settlement of disputes: 22.1 ……….. 22.2 ……….. 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 provisions of Indian Arbitration and Conciliation Act 1996 or any statutory modification thereof. The arbitrator shall state his reasons in passing the award. A reference for adjudication under this clauses shall be made by the Contractor within 6(six) months from the date of intimating the contractor of the preparation of final bill or his having accepted payment whichever is earlier. Only contracts executed in Tripura shall have jurisdiction for any suit arising out of this contract. More particularly no suit shall be instituted or entertained in any court outside the state arising out of contract.” (emphasis supplied) 4. On 24.11.2017 the petitioner/contractor, claiming the work to have been completed, requested the Executive Engineer for release of the amount, which request, was reiterated vide another communication dated 19.12.2017. Inaction on the part of the respondents led the petitioner file an application before this Court, seeking appointment of an Arbitrator, which stood decided vide order dated 28.11.2018 (titled as Ashes Deb vs. The State of Tripura & others), reserving liberty to the petitioner/contractor to first take resort to and exhaust the procedure for “settlement of disputes” as stipulated under the contract. 5. 5. Pursuant thereto, on 04.12.2018 petitioner/contractor approached the Executive Engineer asking him to settle the disputes in accordance with Clause-22 of the agreement. It appears that petitioner’s claim was found not to be tenable and as such, his request for release of the amount stood rejected vide communication dated 19.12.2018. Petitioner/contractor reiterated his request vide communication dated 31.01.2019 which again stood rejected vide communication dated 20.02.2019, that of the Superintending Engineer. Hence, undisputedly petitioner has fully exhausted the in-house mechanism provided for settlement of the disputes, but with his grievances still surviving. 6. The instant petition is opposed primarily on the ground that petitioner’s claim is wholly untenable, apart from the fact that petitioner/contractor has not taken recourse to the remedies provided under the agreement. Also since work commenced prior to the Act being amended by virtue of the Amendment Act, as such petitioner’s case would continue to be governed under the unamended provisions of the Act. Thus implying, that the present petition having been filed without any cause of action needs to be rejected. 7. Clause-22.1 & 22.2 of the agreement provides for an in-house multilevel mechanism for settlement of disputes within a stipulated period of time. Well, this Court need not labour thereupon, for it is not disputed before this Court that such clause stands fully complied with. The petitioner/contractor did write to the Engineer-in-charge who took a decision, though unpalatable, prompting the issue to be taken up by the Superintending Engineer who also took a decision, not favouring the petitioner/contractor. 8. Significantly, the matter would not rest here, for the parties, under the very same clause [22.2] agreed to provide for a different mode of settlement of claims, and that being through the process of adjudication by an arbitrator. With the decision taken by the Superintending Engineer, and the petitioner/contractor being dissatisfied with the same, he has an option to have the disputes referred to the arbitrator, which as per the said clause, considering the value of the claim, was required to be adjudicated by an Arbitrator appointed by the Chief Engineer of another department or an Arbitrator appointed by the Chief Engineer of the same department. The arbitral proceedings are required to be conducted in accordance with the provisions of the Indian Arbitration and Conciliation Act, 1996 “or any statutory modification thereof”. 9. Now, in the instant case, notice raising claims was issued on 24.11.2017. The arbitral proceedings are required to be conducted in accordance with the provisions of the Indian Arbitration and Conciliation Act, 1996 “or any statutory modification thereof”. 9. Now, in the instant case, notice raising claims was issued on 24.11.2017. The in-house mechanism stands exhausted and the petitioner/contractor wants the dispute to be referred for arbitration. 10. The issue which arises for consideration is as to whether, in the light of Clause-22.2, this Court can appoint any Arbitrator for adjudication of the disputes or as to whether such option, if at all, lies with the Chief Engineer. 11. To begin with, this Court takes note of Section 21 of the Act which provides for commencement of arbitral proceedings, which unless the parties otherwise agree, would commence on the date on which request for the dispute to be referred to arbitration is received by the respondent. In the instant case, one thing is very clear. Parties had not agreed to anything contrary to what is so provided under the said Section. Hence, what is required to be seen is the date on which such request was made. There is no dispute of such request having been made on 24.11.2017, even though agreement was executed much prior thereto, i.e. on 12.11.2014 and according to the contractor, work was completed only on 27.06.2017. 12. Moving on, one notices that section 11 of the Act lays down the procedure for appointment of the arbitrator. Law enables any one of the parties to approach the Court seeking appointment of an arbitrator, resulting as a consequence of inaction on the part of the party obligated under the prescribed procedure, agreed upon by the parties, to be so done. 13. Sub-section (5) of Section 12, incorporated by virtue of the Amendment Act, makes the person referred to in the Seventh Schedule of the Act, ineligible for appointment as an arbitrator. It is not in dispute that “another Chief Engineer” or the “Chief Engineer”, are disentitled on account of such ineligibility to be appointed as an arbitrator. 14. The next issue which arises for consideration is as to whether the Chief Engineer can appoint an arbitrator, i.e. his nominee or not. 15. It is not in dispute that “another Chief Engineer” or the “Chief Engineer”, are disentitled on account of such ineligibility to be appointed as an arbitrator. 14. The next issue which arises for consideration is as to whether the Chief Engineer can appoint an arbitrator, i.e. his nominee or not. 15. This issue is no longer res integra and is squarely covered by a decision rendered by the Apex Court in TRF Limited vs. Energo Engineering Projects Limited, (2017) 8 SCC 377 , wherein the Court has categorically held that a person having become ineligible by operation of law, cannot nominate a person, for if nomination of an arbitrator by an ineligible arbitrator is allowed, it would tantamount to carrying on the proceeding of arbitration by himself. 16. One finds the parties to have agreed to be bound by any change in position of law, for the terms of the agreement are unambiguously and unequivocally clear. Arbitration is to be conducted in accordance with the provisions of the principal Act or “any statutory modification thereof”. Again what is the effect of the amendment, with respect to such of those agreements which were executed prior to the Amendment Act being in force, i.e. 23.10.2015, the Apex Court in Board of Control for Cricket in India vs. Kochi Cricket Private Limited and others, (2018) 6 SCC 287 , has observed, in para-76 of the report, that the starting point of application of the Amendment Act would be only when notice to arbitrate stands received by the respondent, which could be “many years” after the arbitration agreement was entered into. Hence, parties would be governed by the provisions of the Amendment Act. Similar view stands taken by Hon’ble the Apex Court in Civil Appeal No.3972 of 2019, titled as Bharat Broadband Network Limited vs. United Telecoms Limited, decided on 16.04.2019. 17. Thus when viewed cumulatively, one finds the objection raised by the respondents to be wholly untenable in law. By virtue of Sections 11(6), 12(5) and Section 21, it is only this Court which can refer the disputes for arbitration by appointing an arbitrator other than the one named in the agreement. 18. Merits of the petitioner’s claims are not required to be adjudicated by this Court. It’s the job of the arbitrator, who shall decide the issue of tenability of the claims. 19. 18. Merits of the petitioner’s claims are not required to be adjudicated by this Court. It’s the job of the arbitrator, who shall decide the issue of tenability of the claims. 19. The Court did try to persuade the parties to agree to a person of their choice, which suggestion was not workable. As such, this Court proceeds to appoint the arbitrator, more so, when there is no legal bar in doing so. The disputes having arisen in relation to the contract in question require to be adjudicated in terms thereof. There is no other legal impediment in doing so. 20. As such, this Court appoints Mr. Justice Swapan Chandra Das (Retired) as an arbitrator to adjudicate the dispute inter se the parties, having arisen out of agreement No.08/CE/SE-V/EE/LTV/PWD/MANU/2014-15, in relation to work order dated 12.11.2014. 21. The parties shall appear before the arbitrator on 30th April, 2019 and apprise him of the passing of the order. Parties shall fully cooperate and not take any unnecessary adjournment. 22. The arbitrator shall decide/adjudicate the disputes at the earliest and certainly within the timeframe stipulated under the law. The arbitrator shall be entitled to fees as per prescribed schedule. 23. Registrar (Judicial) shall ensure that copy of order is received by the learned Arbitrator. 24. The petition stands disposed of in the above terms.