Beas Valley Power Corporation Ltd. v. Continental Construction Projects Ltd.
2019-07-09
CHANDER BHUSAN BAROWALIA
body2019
DigiLaw.ai
JUDGMENT : Chander Bhusan Barowalia, J. 1. The present application, under Section 151 of the Code of Civil Procedure, has been maintained by the applicant-respondent for extension of time for concluding the arbitration case. As per the applicant, the non-applicant has preferred an appeal against the interim award passed by the learned Arbitrator, which was disposed of by this Court with a direction to decide the dispute within six months. However, the award could not be pronounced within six months, consequently, an application being OMP No. 210/2017 for extension of time was filed, the application was disposed of by extending the time by another six months. The matter is at the final stage of adjudication and arguments on the part of the claimant are complete, whereas the respondent is in midway of the arguments and as the extended time of six months had also lapsed, the present application may be allowed and further six months time may be granted in order to enable the learned Arbitrator to complete the proceedings. 2. Reply to the application stands filed, wherein it has been averred that present application is not maintainable as the same was filed on 08.03.2018 and the objections were notified on 12.03.2018 by the Registry of this Court. The applicant removed the objections on 20.07.2018, after four months, which is patently beyond the time prescribed under the Original Side Rules framed by this Court. Consequently, the application deserves to be dismissed with exemplary costs. 3. In rejoinder thereto, the applicant denied the averments made in the reply filed by the non-applicant and reiterated the contents of the application. On merits, it has been averred that as the case is at the verge of final decision, present application may be allowed and time be extended. 4. Mr. Sunil Mohan Goel, learned counsel for the applicant has vehemently argued that the application is required to be allowed, as the arbitration proceedings are going on since 2010 and now they are at the final stage. He has further argued that if six months more time is given to learned Arbitrator, no prejudice will be caused to the non-applicant. 5. On the other hand, Mr.
He has further argued that if six months more time is given to learned Arbitrator, no prejudice will be caused to the non-applicant. 5. On the other hand, Mr. J.S. Bhogal, learned Senior Counsel appearing on behalf of the non-applicant, has argued that time cannot be extended any further, as this Court has already granted six months time to the Arbitrator vide order dated 21.06.2017, which has expired on 21.12.2017 and thereafter the present application has been filed on 08.03.2018, which remained under objections for approximately 133 days. He has further argued that even otherwise also the Arbitrator has lost the faith of the non-applicant for the simple reason that he started the evidence of the claimant on 13.03.2014 and continued with it till 25.09.2017 and on 25.09.2017, he gave one opportunity to the non-applicant to lead its evidence by 25.10.2017 and the case was fixed for 19.11.2017, however, on 13.11.2017, learned Arbitrator passed an order in the file and listed the case for arguments on 19.11.2017. He has argued that non-applicant has also lost faith in the learned Arbitrator, as on 27.10.2017 only the affidavits were seen, but learned Arbitrator has refused to accept the evidence, so in these circumstances, time is not required to be extended. Lastly, it has been vehemently argued that the present Arbitrator cannot act, but the parties may initiate the process for the appointment of another Arbitrator. 6. In rebuttal, Mr. Sunil Mohan Goel, learned counsel for the applicant, has argued that at this stage, the objections with regard to the conduct of the Arbitrator cannot be taken, as there is separate course and procedure for that and the present application is only for extension of time in making the award. He has further argued that once the Arbitrator is appointed, the only recourse available is to raise objections before the learned Arbitrator or to seek appropriate remedy under the law. In support of his contentions, Mr. Sunil Mohan Goel, learned counsel has relied upon the decision rendered by Hon'ble Apex Court in S.P. Sangla Constructions Private Limited vs. State of H.P. and another, 2019 2 SCC 488 , relevant extracts of the judgment read as under: "10.
In support of his contentions, Mr. Sunil Mohan Goel, learned counsel has relied upon the decision rendered by Hon'ble Apex Court in S.P. Sangla Constructions Private Limited vs. State of H.P. and another, 2019 2 SCC 488 , relevant extracts of the judgment read as under: "10. A perusal of clause (65) makes it apparently clear that it was permissible to appoint a person by designation and this will be evident from clause (65), in particular the sentence "the arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason the Chief Engineer is to appoint another person .". If appointments were only to be made by name and not by designation there could be no question of further appointment on the Arbitrator vacating his office. It is only when an Arbitrator is appointed by designation that the question of a vacancy upon the incumbent vacating office could arise thereby enabling the Chief Engineer to appoint another person to act as arbitrator. The Superintendent Engineer, Arbitration Circle appointed as the Arbitrator is from the very arbitration circle, HPPWD and such appointment is only as per clause (65) of the contract and we find no merit in the objection raised by the appellant. 11. Likewise, there is no merit in the contention of the appellant- contractor that the appointed arbitrator is an employee in service of the HPPWD which the provision of Section 12(5) of the 1996 Act (as amended w.e.f. 23.10.2015) bars at the threshold itself. In a catena of judgments, the Supreme Court held that arbitration clauses in government contracts providing that an employee of the department will be the sole arbitrator are neither void nor unenforceable. [Indian Oil Corporation Limited and others v. Raja Transport Private Limited, (2009) 8 SCC 520 , Ace Pipeline Contracts (P) Ltd. v. Bharat Petroleum Corporation Limited, (2007) 5 SCC 304 , Union of India and another v. M.P. Gupta, (2004) 10 SCC 504 The fact that a named arbitrator is an employee of one of the parties is not ipso facto a ground to raise a presumption of bias or lack of independence on his part. The arbitration agreements in government contracts providing that an employee of the department or a higher official unconnected with the work or the contract will be the arbitrator are neither void nor unenforceable. .. ..
The arbitration agreements in government contracts providing that an employee of the department or a higher official unconnected with the work or the contract will be the arbitrator are neither void nor unenforceable. .. .. .. 21. In the present case, the arbitrator has been appointed as per Clause (65) of the agreement and as per the provisions of law. Once, the appointment of an arbitrator is made at the instance of the Government, the arbitration agreement could not have been invoked for the second time. .. .. .. 23. Section 25 of the Arbitration Act, 1996 deals with the situation where the parties commit default without showing sufficient cause and consequent termination of the proceedings. Section 25 provides three situations where on account of the default of a party, the arbitral tribunal shall terminate the proceedings which are as under:- (i) Under Section 25(a) where the claimant fails to communicate his statement of claim in accordance with sub-section (1) of Section 23; (ii) Under Section 25(b) continue the proceedings on the failure of the respondent to communicate his claim of defence in accordance with sub-section (1) of Section 23; (iii) Under Section 25(c) continue the proceedings, and make the arbitral award on the evidence before it, in the event of a party failing to appear at an oral hearing or produce documentary evidence. 24. Section 25(a) provides that the Arbitral Tribunal shall terminate the proceedings where the claimants failed to communicate his claim in accordance with sub-section (1) of Section 23 of the Act. In the present case, the appellant has failed to file his statement of claim; and only sent the communication to the arbitrator seeking adjournment on the ground that the appellant has approached the High Court by filing petition under Section 11(6) of the Act. When the parties have specifically agreed for appointment of sole Arbitrator of the person appointed by the Engineer-in-Chief/Chief Engineer, HPPWD, the appellant was not right in approaching the High Court seeking appointment of an independent Arbitrator. 25. Inspite of extension of time, since the appellant-contractor had not filed statement of claim, the arbitrator terminated the proceedings under Section 25(a) of the 1996 Act by proceedings dated 06.08.2014.
25. Inspite of extension of time, since the appellant-contractor had not filed statement of claim, the arbitrator terminated the proceedings under Section 25(a) of the 1996 Act by proceedings dated 06.08.2014. The appellant-contractor did not file his statement of claim before the arbitrator since the appellant had approached the High Court by filing petition under Section 11(6) of the 1996 Act, probably under the advice that the appellant can get an independent arbitrator appointed. The appellant had been writing letters to the arbitrator before the hearing seeking adjournment. However, on the fourth occasion, proceedings were simply terminated since no hearings were held on earlier occasions, he expected that his request might be accepted. The arbitrator could have issued a notice warning the appellant that no adjournment would be granted under any circumstances. Since, no such warning was given, we deem it appropriate to set aside the order of termination. Appellant had made a claim on account of delay as indicated in his letter dated 18.10.2013 under various heads. In the interest of justice, in our considered view, an opportunity is to be afforded to the appellant to go before the departmental arbitrator (as agreed by the parties in clause (65) of the general conditions of contract) and the proceedings of the arbitrator dated 06.08.2014 terminating the proceedings is to be set aside. We are conscious that after the Amendment Act, 2015, there cannot be a departmental arbitrator. As discussed earlier, in this case, the agreement between the parties is dated 19.12.2006 and the relationship between the parties are governed by the general conditions of the contract dated 19.12.2006, the provisions of the Amendment Act, 2015 cannot be invoked. .. .. .." 7. To appreciate the arguments of learned counsel for the parties, this Court has gone through the records in detail. 8. On 21.06.2017, this Court passed the following order in OMP No. 210 of 2017: "The present application has been maintained by the applicant/respondent under Section 151 of the Code of Civil Procedure, for extension of time to complete the proceedings. As per the applicant, the aforesaid appeal was decided by this Hon'ble Court on 06.07.205, with the direction to the then Arbitrator, Sh. R.K. Sharma to decide the arbitration proceedings within six months from the date of passing of the order.
As per the applicant, the aforesaid appeal was decided by this Hon'ble Court on 06.07.205, with the direction to the then Arbitrator, Sh. R.K. Sharma to decide the arbitration proceedings within six months from the date of passing of the order. However, the learned Arbitrator could not decide the matter due to his ill health and on 30.11.2016, he passed away. Thereafter, Sh. K.D. Sharma, Chief Engineer (Retd.) has been appointed as substitute Arbitrator and has to take over the proceedings where it was left and since the proceedings are at the stage of recording the evidence, thus learned Arbitrator is praying for one year more time to complete the proceedings. The application is duly supported by an affidavit. No reply to the application has been filed. Heard. Taking into consideration the fact that earlier Arbitrator has passed away and new Arbitrator needs some more time to complete the proceedings, this Court finds that interest of justice would be met, in case, time to complete the proceedings is further extended by six months. Accordingly, the present application is allowed and time to complete the proceedings is further extended by six months. The application stands disposed of." 9. The record shows that on 13.03.2014, the evidence by way of affidavit was tendered by the non-applicant/claimant and thereafter the evidence of the non-applicant continued till 25.09.2017. The learned Arbitrator has given time to the non-applicant to lead evidence by 25.10.2017 by way of affidavit. On 13.11.2017, learned Arbitrator passed an order an listed the matter for arguments on 19.11.2017. On 19.11.2017, when the evidence of the non-applicant appeared before the learned Arbitrator, learned Arbitrator shown ignorance with respect to receipt of examination-in-chief by way of affidavit sent to the learned Arbitrator through E-mail. The learned Arbitrator has not examined the witness, when the witness was present on the first date, after closure of the evidence of the applicant.
On 19.11.2017, when the evidence of the non-applicant appeared before the learned Arbitrator, learned Arbitrator shown ignorance with respect to receipt of examination-in-chief by way of affidavit sent to the learned Arbitrator through E-mail. The learned Arbitrator has not examined the witness, when the witness was present on the first date, after closure of the evidence of the applicant. The learned Arbitrator has granted four years to the applicant for leading evidence and the evidence of the non-applicant was not examined, even when he was present on the first date fixed, after closure of the evidence of applicant, which created doubt in the mind of the non-applicant with respect to the impartiality of the Arbitrator and for these reasons the non-applicant is showing its lack of faith in the Arbitrator and wants that extension in time may not be granted to the learned Arbitrator. 10. Admittedly, the proceedings are pending before the learned Arbitrator since long and inspite of last extension, the same are yet to be concluded and the manner in which learned Arbitrator has acted, raised reasonable suspicion in the mind of the non-applicant/claimant. This Court finds that in these circumstances, no further extension can be granted to learned Arbitrator, even otherwise also, the application has been moved much after the last extension is over. As far as the law cited by learned counsel for the applicant (supra), the same is not applicable to the facts of the present case, as the case cited was with respect to the Arbitrator being employee of one of the party, which contention is not accepted by Hon'ble Apex Court, however, the facts of the present case are totally different. 11. So, in view of the above discussion, the present application, which is devoid of merits, deserves dismissal and is accordingly dismissed. The parties to bear their own costs. However, if there is still any dispute inter se the parties, the parties may initiate process for appointment of another Arbitrator, as per law.