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2019 DIGILAW 849 (ALL)

KANSAL AND CO, GORAKHPUR THRU PROP VIKAS AGARWAL v. STATE OF U. P.

2019-04-04

ALOK MATHUR

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JUDGMENT : Alok Mathur, J. Heard Sri Pratish Kumar, learned counsel for the petitioners as well as learned Standing Counsel for respondent nos. 1 to 4. 2. In the light of the order proposed to be passed, service of notice upon respondent nos. 5, 6and 7 is dispensed with. 3. Learned counsel for the petitioners submitted that petitioners are Government Contractors and carry out constructions business for the State Government as well as Central Government. In pursuance of tender floated for constructions of Gorakhpur-Maharajganj Road, the petitioner firm participated and being the lowest bidder, was duly selected to execute the work. It is further submitted that the work was to be completed within a period of nine months', but due to several problems, the petitioner firm was not able to execute the assigned work within time and sought for extension of time period for completion of the work, but respondent nos. 3 and 4 did not provide any extension and finally the security deposited by the petitioners was forfeited. 4. The petitioners being aggrieved by the action of the respondents moved an application for appointment of Arbitrator in terms of Clause 32 of the Agreement entered into between the parties and the respondents. A panel of three Arbitrators was constituted on 22.02.2010. It has also been brought on record that the Presiding Arbitrator resigned from his post on account of his bad health and was replaced by Sri M.K. Kanodia as Presiding Arbitrator, but he also resigned by refusing to act as Presiding Arbitrator. After the constitution of arbitral tribunal, the arbitration proceedings were conducted and in the meantime the Arbitrators and the Presiding Arbitrator were changed for one reason or the other. 5. Grievance of the petitioners is that the arbitration proceedings are pending for the last nine years they have not concluded. It is submitted that Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act, 1996") itself provides for completion of arbitration proceedings within specified time, no efforts have been made by the Arbitrators to proceed and conclude the proceedings. 6. Learned Standing Counsel submits that this Court would not have any power to direct for expeditious disposal of the arbitration proceedings inasmuch as this Court cannot issue direction under Article 227 of the Constitution of India to the Arbitration Tribunal, as this Court would not have supervisory jurisdiction over it. 7. 6. Learned Standing Counsel submits that this Court would not have any power to direct for expeditious disposal of the arbitration proceedings inasmuch as this Court cannot issue direction under Article 227 of the Constitution of India to the Arbitration Tribunal, as this Court would not have supervisory jurisdiction over it. 7. Rebutting aforesaid argument, learned counsel for the petitioners placed reliance on the judgment of Himachal Pradesh High Court in the case of M/s M.L. Gupta and Associates Vs. H.P. Housing & Urban Development Authority and Others (CMPMO No. 235 of 2011, decided on 12.09.2011), in which this very question was under consideration, and the Court in M/s M.L. Gupta and Associates (supra) observed as under : "......Therefore, it is apparent that the arbitral tribunals do function under the general supervision of the civil courts and some of their actions are liable to be set-aside by the Courts as per the statute itself. In my view this is a clear cut indicator of the fact that the arbitral tribunals are discharging statutory functions in terms of the Arbitration and Conciliation Act, 1996 and therefore, must be held amenable to the supervisory jurisdiction of the High Court. No doubt, as cautioned by the Apex Court, the High Court should not interfere in each and every order and the powers under article 227 of the Constitution of India should not be used to delay the arbitration proceedings but where there is patent illegality or delay is being caused by the Arbitral Tribunals, as in the present case, the Court must exercise such jurisdiction........" 8. This Court has been informed by learned counsel for the petitioners that by means of order dated 11th March, 2019, Sri Dinesh Kumar Singh, Principal Secretary, Law and Justice, Government of U.P. has nominated himself as co-arbitrator alongwith Chief Engineer, PWD, Lucknow and Sri S.K. Agarwal, has been nominated as Presiding Arbitrator, after retirement of Chief Engineer, PWD, Lucknow. He further submits that Arbitration Tribunal is now complete and there is no hindrance in expeditious disposal of the matter. He further submits that both pleadings and evidence are complete and only final arguments remain to be made in the matter. 9. From the perusal of the Act, 1996, it is clear that Courts have powers to appoint arbitrators as per Section 11 of the Act, 1996. He further submits that both pleadings and evidence are complete and only final arguments remain to be made in the matter. 9. From the perusal of the Act, 1996, it is clear that Courts have powers to appoint arbitrators as per Section 11 of the Act, 1996. Power under Section 9 of the Act, 1996 provides that when a party before or during the arbitral proceedings approaches the Court has power to grant interim protection with regard to the matters stated therein and also under Section 27 of the Act, 1996, may apply to the Court for assistance and taking evidence in certain circumstances. It is needless to say that arbitral award can be challenged under Section 34 of the Act, 1996 before the Court of competent jurisdiction. This clearly indicates that the High Court has supervisory jurisdiction over the Arbitral Tribunal constituted under the Act, 1996, for expeditious disposal of the arbitration proceedings in exercise of power under Article 227 of the Constitution of India. 10. In the instant case, the writ jurisdiction has been invoked under Article 227 of the Constitution of India on the sole object of expediting arbitration proceedings, despite the fact that power under Section 29(a) of the Act, 1996 already exist for extension of time to the concerned parties. In the instant case, both the parties agree that that arbitration proceedings be expedited and therefore in exercise of power under Article 227 of the Constitution of India, this Court would step in, where circumstances so exist that arbitration proceedings are pending for the last nearly ten years' and are being delayed for one reason or the other and also due to change of members of the panel of arbitrators, to expedite the proceedings. 11. In any view of the matter, this Court is satisfied that the Arbitration Tribunal is amenable to the supervisory jurisdiction under Article 227 of the Constitution of India and when ever there is any manifest illegality which deserves any correction in exercise of powers under Article 227 of the Constitution of India, the High Court would step in whenever it is desired necessary to correct such an order passed by the Arbitration Tribunal. 12. 12. In the facts and circumstances of the case in hand, it is clear that arbitration proceeding is pending since last ten years, which is quite serious in itself and requires interference by this Court under its supervisory jurisdiction under Article 227 of the Constitution of India. Even the provisions as contained in Section 29A of the Act, 1996, provide that arbitration proceedings have to be completed within the period of one year. This amendment was brought in force by amendment dated 23rd October, 2015. 13. I am satisfied that this is a fit case for interference under Article 227 of the Constitution of India. The arbitration proceedings are pending for last nine years and they deserve to be expedited. The arbitration proceedings should be concluded expeditiously in accordance with the scheme of the Act, 1996 and should not take such a long time, otherwise the sanctity of arbitration proceedings itself would stand frustrated in case proceedings take such undue time for settlement of commercial dispute. 14. In the light of the above, the Tribunal is directed to decide the dispute pending before it, expeditiously, say within a period of three months' from the date a certified copy of this order is produced before it. 15. With the aforesaid observations/directions, the writ petition is allowed.