Vidhyawati Construction Co. Builders and Govt. Contractors v. Allahabad Development Authority
2020-11-04
ROHIT RANJAN AGARWAL
body2020
DigiLaw.ai
JUDGMENT : 1. Heard Sri Ashish Kumar, learned counsel for the applicant and Sri Arun Kumar, learned counsel for the respondent-Development Authority. 2. This application under Section 11(4) and 11(6) of Arbitration and Conciliation Act, 1996 (hereinafter referred to as “Act, 1996”) has been filed for appointment of an independent Arbitrator, preferably a retired Judge of this Court. 3. Facts, in nutshell, are that on 26.02.1985, Allahabad Development Authority (Now known as Prayagraj Development Authority, for short “Authority”) framed a project for construction of Multi-Storey Complex at Clock Tower, Chowk then Allahabad (now Prayagraj). Tender, inviting for construction of Commercial Complex, was issued on the said date. Cost of project was quantified approximately at Rs.57 lakhs. Applicant-Company being the lowest bidder, the bid was accepted on 19.03.1985 and an agreement was entered between the parties on 04.04.1985 for construction of two-storey Commercial Complex, to be completed within six months from the date of commencement. However, at a later date, the said project was changed to four-storey Complex along with one Powerhouse building and the cost was also varied. The contract contains arbitration clause no.46 providing for adjudication of dispute by Arbitrator as per the provisions of Arbitration Act, 1940 (old Act) as well as any statutory modifications thereafter. As per the terms of the agreement, construction was not completed within six months as such period was extended and it was completed on 31.8.1987. The applicant-Company was paid about Rs.1,14,00,000/-out of twelve running bills for amount of Rs.1,14,43,922.01. However final bill was submitted by applicant on 09.12.1989 before the Authority. According to the applicant, as the bill was not cleared by the authority, a Writ Petition No.9086 of 1993 was filed before this Court seeking a writ of mandamus commanding the respondent-Authority to release the final amount of bill. This Court on 21.01.1994 disposed of the writ petition directing the Vice-Chairman of the Authority to decide the claim of applicant-Company within a period of one month from the date on which certified copy of the order is produced before him. On 17.06.1994 the Vice Chairman of the respondent-Authority rejected the claim of the applicant-Company.
This Court on 21.01.1994 disposed of the writ petition directing the Vice-Chairman of the Authority to decide the claim of applicant-Company within a period of one month from the date on which certified copy of the order is produced before him. On 17.06.1994 the Vice Chairman of the respondent-Authority rejected the claim of the applicant-Company. The applicant-Company on 11.02.1995 sent a letter to the Vice-Chairman of the respondent Authority appointing one Sri R.C.Jain, fellow of Indian Institute of Architect, as an Arbitrator invoking the arbitration clause and requested the Authority to appoint another Arbitrator in terms of the Clause 46, and in case the Authority fails to appoint Arbitrator within 15 days, the Arbitrator appointed by the applicant shall adjudicate the dispute between the parties as sole Arbitrator. On 06.02.1995, the Vice Chairman of the Authority informed the applicant that the matter had already been decided and the claim of the applicant has been rejected on 17.06.1994, thus question of appointing Arbitrator does not arise. 4. The applicant Company on 07.02.1996 submitted 18 claims before the Arbitrator, who issued notice to the Authority on 14.04.1996, but the Authority neither appeared before the Arbitrator nor filed the reply. Various dates were fixed by the sole Arbitrator Sri R.C.Jain as 14.02.1997, 12.4.1997, 23.4.1997 and 24.4.1997 for hearing the matter. The sole Arbitrator could not give the award within the statutory period, as such an application was filed for extension of time before the Court under Section 28 of the Arbitration Act, 1940 (old Act). The Court extended the period with the condition that award be given by 3rd June, 1997. Arbitrator thereafter fixed 19.05.1997 for hearing and award was delivered on 23.05.1997 for a sum of Rs.1,17,91,714/-as principal and interest on Rs.88,12,763/- at the rate of 18% from the date of award till decree or payment whichever is earlier. 5. The said award was submitted before Civil Judge (Senior Division) Allahabad for making the award Rule of the Court, and an application was registered as Suit No.327 of 1997. The Authority filed objection under Section 30/33 of the Arbitration Act, 1940 (old Act), which was registered as Case No.395 of 1997. The Court below made the award Rule of the Court and rejected the objection of the Authority vide judgment and order dated 24.05.1999. 6.
The Authority filed objection under Section 30/33 of the Arbitration Act, 1940 (old Act), which was registered as Case No.395 of 1997. The Court below made the award Rule of the Court and rejected the objection of the Authority vide judgment and order dated 24.05.1999. 6. The Authority thereafter filed First Appeal From Order No.1072 of 1999 before this Court challenging the order dated 24.5.1999. This Court on 20.9.2001 while allowing the appeal of the Authority, set aside the order of the Court below dated 24.5.1999 as well as award of the Arbitrator dated 23.05.1997 and remitted back the matter to the Arbitrator to take decision afresh in view of the observation made in the said order. This order was challenged by the applicant before Hon’ble Apex Court and vide judgment dated 09.04.2008 the Apex Court dismissed the Civil Appeal No.4027 of 2002. Against the said order, a Review Petition No.13735 of 2008 was preferred by the applicant which was also dismissed by the Apex Court on 20.08.2008. After dismissal of the Civil Appeal as well as Review Petition, the applicant approached the Arbitrator on 18.09.2008 for starting up arbitration proceedings as per the remand order of this Court dated 20.09.2001. 7. The applicant has brought on record through second supplementary affidavit some of the correspondence made by him to the Arbitrator on 30.10.2008, 27.12.2008, 25.01.2009, 31.03.2009, 26.10.2009, 04.02.2010, 10.07.2010, 02.09.2010, 16.03.2011, 14.06.2011, 22.03.2012, 30.08.2012, 04.12.2012, 02.08.2013, 02.09.2013, 23.12.2013 and reminder dated 28.07.2014 for fixing date for hearing. Further, few receipts of the years 2009, 2011 and 2015 have been brought on record as Annexure-2 to the second supplementary affidavit demonstrating that the reminders were sent to the sole Arbitrator Sri R.C. Jain for fixing date. All these facts regarding earlier appointment of Arbitrator by the applicant in the year 1996, as well as award of the year 1997 and the award being made Rule of the Court on 24.05.1999 and they being challenged by the Authority before this Court in Appellate jurisdiction has not been disclosed by the applicant in his application under Section 11 (4) and 11 (6) of the Act, 1996.
It is only when the Authority filed its counter affidavit and disclosed the fact, that the applicant had filed the first and second supplementary affidavit bringing on record the facts that earlier the sole Arbitrator appointed at their instance, the award was pronounced in the year 1997 and the same which was made Rule of the Court was set aside by this Court on 20.09.2001, was ultimately challenged before the Apex Court and after the dismissal of the Civil Appeal and Review Petition on 09.04.2008 and 20.08.2008, the applicant approached the sole Arbitrator for rehearing of the matter. 8. Furthermore, the applicant invoked the Arbitration clause on 12.08.2019 seeking an appointment of the Arbitrator. 9. Sri Ashish Kumar, learned counsel appearing for the applicant submitted that this application under Section 11 (6) be read with Sections 14 and 15 of Act, 1996 as when earlier Arbitrator refused to act or abandoned the arbitration proceedings, a substitute or new Arbitrator be appointed. He further submitted that earlier Arbitrator, Sri R.C. Jain was appointed as a nominee Arbitrator on behalf of the applicant and when the Authority refused to appoint another Arbitrator in terms of Clause 46, Sri Jain proceeded as sole Arbitrator. 10. The second limb of the argument is that the Arbitration Clause 46 provides for any statutory modification, and as the new Arbitration and Conciliation Act came in the year 1996 is applicable, and thereafter amendment of 2015 as per Section 11 (6A), the Court can only examine the issue with relation to existence of Arbitration Clause and the issue of limitation will be left to be decided by the Arbitrator. The present claim of the applicant is not barred by limitation as the applicant had invoked Arbitration Clause on 11.02.1995 i.e. within time after the rejection of application by Vice Chairman of the Authority on 17.06.1994. It is also contended that as far as remand of the matter back to Arbitrator is concerned, the order dated 20.09.2001 passed by this Court had attained finality by the Apex Court, and as the Arbitrator did not decide the issue and had abandoned, thus, the mandate of the Arbitrator stood terminated and Court has to appoint a substitute/new Arbitrator. 11.
11. Lastly, it was contended that though the arbitration proceedings commenced under the old Act of 1940, but the new Act of 1996 would be applicable as is clear from Clause 46 which provides that any statutory modification will be applicable to the arbitration proceedings and thus it is saved by Section 85(2)(a) of the Act, 1996. 12. Reliance has been placed upon decisions of Apex Court in the case of Mayavati Trading Pvt. Ltd. vs. Pradyuat Deb Burman 2019(6) Arb.LR 1 (SC), Uttarakhand Purv Sainik Kalyan Nigam Limited vs. Northern Coalfields Limited 2019(6) Arb.LR 237 (SC) and Madras Port Trust vs. Hymanshu International AIR 1979 SC 1144 on the question of limitation. 13. On the question of applicability of old or new Act, reliance has been placed upon the decisions in case of M/S Reshma Construction vs. State of Goa 1998 (3) BomCR 837 and Deputy Manager (Engg.), & Another vs. Satyanarayana Contractors Company, Gudivada & others 2009(Suppl.2) Arb.LR.222 (AP). 14. As far as appointment of substitute/new Arbitrator is concerned, reliance has been placed on decisions in the case of Satya and ors. vs. Vidarbha Distillers and others AIR 1998 Bom 210 ; Kurup Engineering Company Pvt. Ltd. vs. Bharat Heavy Electricals Limited and others 2008(2) Arb.LR 290 (Delhi); Union of India vs. Singh Builders Syndicate 2009(4) SCC 523 and Cinevistaas Limited vs. Prasar Bharati 2008(4) Arb.LR 112 (Delhi). 15. Per contra, Sri Arun Kumar, counsel appearing for the Authority submitted that this application under Section 11(4) and 11(6) of the Act, 1996 has been filed concealing the relevant material facts from the Court. It is submitted that it is a dead claim of the applicant and remedy of arbitration has already been exhausted after an Arbitrator was appointed under the old Act. He further submitted that vide order dated 17.6.1994 the Vice Chairman after hearing the applicant and Executive Engineer had held that the applicant was not entitled for any outstanding against him. Moreover, a sum of Rs.3,79,552.23 had to be returned by the applicant to the Authority. It is further contended that after dismissal of the Review Petition by the Apex Court in the year 2008, the applicant had written to the sole Arbitrator for the first time on 18.9.2008 and no communication has been made after 11.3.2015 as per the documents filed by the applicant along with second supplementary affidavit.
It is further contended that after dismissal of the Review Petition by the Apex Court in the year 2008, the applicant had written to the sole Arbitrator for the first time on 18.9.2008 and no communication has been made after 11.3.2015 as per the documents filed by the applicant along with second supplementary affidavit. Thus, after about 12 years from the date of decision of Apex Court, the applicant has approached this Court for the appointment of Arbitrator under the new Act invoking the clause in the year 2019 concealing the earlier arbitration proceedings. 16. It is contended by counsel for the respondent that proceedings initiated under the old Act, which has commenced prior to the coming of the new Act shall be held as per the provisions of old Act and reliance has been placed upon decision of Apex Court in the case of Thyssen Stahlunion GMBH vs. Steel Authority of India Ltd. JT 1999 (8) SC 66. He further contended that in view of provisions of Section 16(3) of the old Act, an award remitted by the Court to the Arbitrator for reconsideration shall become void on the failure of the Arbitrator to reconsider it and submit his decision within the time fixed. As no time was fixed while the matter was remitted back, thus the award has to be made considering the provisions of Section 3 of the old Act read with first Schedule under which the Arbitrator is required to make his award within four months. 17. Lastly it was contended that though the Apex Court had held that while deciding application under Section 11(4) and 11(6) of the new Act the Court is empowered to see only whether an arbitration agreement exist, but before appointing an Arbitrator, Court can look into the maintainability of fresh proceedings under the new Act when proceedings under the old Act has already been initiated though had not been decided. Reliance has been placed upon decision of this Court in the case of M/s Ram Shakti Construction vs. Agra Development Authority and another 2017(2) ADJ 262 where the Court held that it is imperative that a satisfaction is arrived that live claim exist which could be arbitrated upon. 18. I have heard counsel for the parties and perused the material on record. 19.
18. I have heard counsel for the parties and perused the material on record. 19. This is an application under Section 11(4) and 11(6) of Act, 1996 for appointment of Arbitrator invoking the arbitration clause 46 as contained in agreement dated 04.04.1985 entered between the parties. According to para 20 of the affidavit to the application, arbitration clause was invoked on 12.8.2019 for the appointment of an independent Arbitrator. 20. It is not disputed by the applicant that at the time of filing of the application under Section 11(4) and 11(6) of the new Act, the entire facts of the case was not disclosed by him and simplicitor it was alleged that there existed a dispute between the parties and pursuant to Clause 46 of the agreement arrived in the year 1985 between them, an Arbitrator be appointed. It was when the counter affidavit was filed by the Authority, the true picture revealed and it was brought to the notice of the Court that earlier round of arbitration proceedings had been initiated and held at the behest of the applicant. It is also not in dispute that the applicant had himself approached this Court through Writ No.9086 of 1993 for the release of his final bill, and on 21.01.1994 direction was issued to the Vice Chairman of the Authority to decide the claim of the applicant. It is also not in dispute that on 17.6.1994 the claim was rejected by the Development Authority thereafter the arbitration Clause 46 was invoked appointing one Sri R.C.Jain, who proceeded to adjudicate upon the dispute as sole Arbitrator. An award was made on 23.5.1997 which was subsequently made Rule of the Court on 24.5.1999. Till this stage the respondent-Authority never appeared before Arbitrator, but the order making award Rule of the Court as well as award was challenged by the Authority through F.A.F.O. No.1072 of 1999 which was allowed on 20.9.2001, and the mater was remitted back to the Arbitrator for decision afresh with certain observations. As the matter was carried to the Apex Court at the behest of the applicant, Civil Appeal of the applicant was dismissed on 09.04.2008 and Review Petition was also rejected on 20.8.2008. During this period, new Arbitration and Conciliation Act, 1996 came into force which provided for repeal and saving clause in Section 85 of the Act. 21.
As the matter was carried to the Apex Court at the behest of the applicant, Civil Appeal of the applicant was dismissed on 09.04.2008 and Review Petition was also rejected on 20.8.2008. During this period, new Arbitration and Conciliation Act, 1996 came into force which provided for repeal and saving clause in Section 85 of the Act. 21. It is also not in dispute that after dismissal of the appeal by Apex Court the applicant had approached the Arbitrator Sri R.C.Jain on 18.9.2008, for hearing of the matter afresh in view of the remand order passed by this Court. It appears that the applicant continued to request the sole Arbitrator till the year 2015 for fixing date in the matter at regular intervals, but after 2015 till 2019 the matter was not pursued with the sole Arbitrator, and in the year 2019, a fresh notice was given to the respondent Authority invoking the arbitration clause and the present application being filed for the appointment of a new Arbitrator. 22. However, during exchange of pleadings the applicant has tried to improve upon his case by filing supplementary affidavit disclosing the earlier sequence of arbitral proceedings initiated by him and held before Arbitral Tribunal of Sri R.C. Jain and various orders passed by this Court and the Apex Court. Further through rejoinder affidavit the applicant has tried to built up a case for substitution of an Arbitrator in terms of Sections 14 and 15 of new Act as the mandate of the Arbitrator stood terminated in view of Section 14(1)(a), as he was unable to perform his function or has failed to act without undue delay. But the original application under Section 11(4) and 11(6) was never amended to bring the facts, and the prayer was made through various supplementary affidavits and rejoinder affidavit. 23. It is no doubt true that mere mentioning of incorrect provision or not mentioning any provision under which the application is filed would not oust the jurisdiction of the Court or the relief claimed by the parties, but the pleadings made in the application discloses the intention of the application which is for appointment of new Arbitrator and not for substitution. 24. The argument raised on behalf of the applicant has now to be tested on the touchstone of Sections 14 and 15 of the amended Act, which are extracted as under: “14.
24. The argument raised on behalf of the applicant has now to be tested on the touchstone of Sections 14 and 15 of the amended Act, which are extracted as under: “14. Failure or impossibility to act.-(1) The mandate of an arbitrator shall terminate and he shall be substituted by another arbitrator, if— (a) he becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay; and (b) he withdraws from his office or the parties agree to the termination of his mandate. (2) If a controversy remains concerning any of the grounds referred to in clause (a) of sub-section (1), a party may, unless otherwise agreed by the parties, apply to the Court to decide on the termination of the mandate. (3) If, under this section or sub-section (3) of section 13, an arbitrator withdraws from his office or a party agrees to the termination of the mandate of an arbitrator, it shall not imply acceptance of the validity of any ground referred to in this section or sub-section (3) of section 12. 15. Termination of mandate and substitution of arbitrator.-(1) In addition to the circumstances referred to in section 13 or section 14, the mandate of an arbitrator shall terminate— (a) where he withdraws from office for any reason; or (b) by or pursuant to agreement of the parties. (2) Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced. (3) Unless otherwise agreed by the parties, where an arbitrator is replaced under sub-section (2), any hearings previously held may be repeated at the discretion of the arbitral tribunal. (4) Unless otherwise agreed by the parties, an order or ruling of the arbitral tribunal made prior to the replacement of an arbitrator under this section shall not be invalid solely because there has been a change in the composition of the arbitral tribunal.” 25. Now, coming to Section 14 of the Act, it mandates that authority of an Arbitrator shall terminate on two conditions being satisfied, firstly he becomes de jure or de facto unable to perform his functions or he fails to act without undue delay. The second condition is when the Arbitrator withdraws from the office or the parties agreed to the termination of his mandate. 26.
The second condition is when the Arbitrator withdraws from the office or the parties agreed to the termination of his mandate. 26. In such a situation, if the parties unless agree, have to apply to the Court to decide on the termination of mandate of the Arbitrator, in terms of sub-section (2) of Section 14. 27. The corresponding provision was there under Section 8(1)(b) and Section 11 of the 1940 Act (old Act). Thus, the party aggrieved has to approach to the ‘Court’ as defined under Section 2(1)(e) of the Act, which means the principal Civil Court of original jurisdiction in a district. Thus a conjoint reading of Section 11(4) and Section 14 clarify that a petition does not lie and can be heard by the Chief Justice or his designate as a petition under Section 14 lies to the “Court” since Fora are different. A conjoint petition does not lie, this was held by Hon’ble Apex Court in the case of Grid Corporation of Orissa Ltd. Vs. AES Corporation & Ors. 2002 (7) SCC 736 . 28. In Lalit Kumar V. Sanghavi v. Dharamdas V. Sanghavi 2014 (136) AIC 117 (SC) it was held that an application under Section 14(2) of the Act for decision on termination of the mandate of an Arbitrator lies only before the “Court” as defined in Section 2(1)(e) of the Act. 29. While dealing with somewhat similar situation, the Supreme Court had appointed an Arbitrator on application under Section 11(5) and (6) of the Act, held that application under Section 14(2) of the Act was not maintainable before the Supreme Court for terminating the mandate of an Arbitrator, as jurisdiction which the Chief Justice or his designate exercises under Section 11(6) of this Act is limited and it becomes functus officio after exercising the same (Nimet Resources Inc. and Another vs. Essar Steels Ltd. (2009) 17 SCC 313 ). 30. The Apex Court held that there is no automatic termination of the mandate of an Arbitrator on the alleged ground of his failure to act without undue delay, and it is the Court which will have to resolve the dispute whether the Arbitrator had failed to act without undue delay. In case the Arbitrator fails to conclude arbitration proceedings within fixed timeline agreed between the parties and the same having not been extended, the mandate of the Arbitrator automatically terminates. 31.
In case the Arbitrator fails to conclude arbitration proceedings within fixed timeline agreed between the parties and the same having not been extended, the mandate of the Arbitrator automatically terminates. 31. In the present case, there was no timeline fixed or agreed between the parties within which the arbitration proceedings was to be concluded and from the conduct of the parties, it appears that after 2015, the proceedings were left abandoned at the hands of the parties and neither of them approached the “Court” as defined under Section 2(1)(e) for terminating the mandate of Arbitrator and getting substituted by another Arbitrator in terms of subsection (2) of Section 15. 32. Prior to 23.10.2015, Section 14 read as under : “14. Failure or impossibility to act.-(1) The mandate of an arbitrator shall terminate, if— (a) he becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay; and (b) he withdraws from his office or the parties agree to the termination of his mandate. (2) If a controversy remains concerning any of the grounds referred to in clause (a) of sub-section (1), a party may, unless otherwise agreed by the parties, apply to the Court to decide on the termination of the mandate. (3) If, under this section or sub-section (3) of section 13, an arbitrator withdraws from his office or a party agrees to the termination of the mandate of an arbitrator, it shall not imply acceptance of the validity of any ground referred to in this section or sub-section (3) of section 12.” 33. Thus, post amendment Section 14 of Act, 1996 was amended to the extent that on failure on part of Arbitrator as provided under sub-section (1) of Section 14 the party unless otherwise agreed between them, apply to the Court to decide on termination of mandate and he shall be substituted by another Arbitrator, which earlier did not find place in the unamended provisions of Section 14. 34. Reverting back to the dispute between the parties, it is evident from the conduct of the applicant that his approach towards getting the matter resolved through arbitration proceedings was very casual, as the party has to approach the Court where Arbitrator fails to act without undue delay. In the present case, no effort was made for about 12 years in getting the mandate of an Arbitrator terminated. 35.
In the present case, no effort was made for about 12 years in getting the mandate of an Arbitrator terminated. 35. While dealing with Section 15(2), this Court in case of Arbitration and Concili. Appl. u/s 11(4) No.37 of 2014 (Baghel Infrastructures Pvt. Ltd. Vs. N.T.P.C. Ltd. And Ors.) decided on 10.11.2014 held as under : If an arbitrator refuses to act as an arbitrator, a substitute arbitrator would be appointed in his place under sub-section (2) of Section 15, except where the intention of the parties was to refer the disputes to arbitration by a particular person only. "Rules" referred to in Section 15(2) would refer not only to any statutory rules or rules framed under the Act or under the Scheme, but also mean that substitute arbitrator must be appointed according to the original agreement or provision applicable to the appointment of the arbitrator at the initial stage. (Yashwitha Construction (P) Ltd. vs. Simplex Concrete Piles India Ltd.). In National Highways Authority of India vs. Bumihiway D.D.B. Ltd., Supreme Court held that provisions of Section 15(2) states that a substitute arbitrator shall be appointed according to the rules applicable to the appointment of arbitrator being replaced. Appointment of retired Chief Justice by the High Court under Section 11(6) was set aside and directions was given that India Road Congress be approached as per the agreed procedure to appoint the arbitrator. The applicant has not challenged the appointment of the arbitrator, but submits that once the application under section 11 has been filed, the respondent have lost their right to appoint any arbitrator, is wholly misconceived. In the facts of the present application, the arbitrator was already appointed and on his resignation another arbitrator has been appointed as per the terms and conditions of the agreement, the application which is ostensibly moved under section 11 of the Arbitration and Conciliation Act to terminate the mandate of the earlier arbitrator, is misconceived and not maintainable. Since the application is not maintainable accordingly dismissed. 36. After careful consideration of Sections 14 and 15 of the Act as well as the law laid down by the Apex Court it is clear that the applicant should apply to the ‘Court’ in regard to the termination of mandate and the substitution of Arbitrator can only be made in pursuance thereof. 37.
36. After careful consideration of Sections 14 and 15 of the Act as well as the law laid down by the Apex Court it is clear that the applicant should apply to the ‘Court’ in regard to the termination of mandate and the substitution of Arbitrator can only be made in pursuance thereof. 37. The other point canvassed by the counsel that in view of the amended provisions of Section 11(6A), this Court cannot go into the question of limitation and only on the basis of existence of the arbitration clause, will appoint Arbitrator. 38. It is no doubt correct that after 2015 amendment the Court is only empowered to see the existence of an arbitration clause as held by the Apex Court in the case of Duro Felguera, S.A. vs. Gangavaram Port Limited (2017) 9 SCC 729 . Relevant paras 48 and 59 read as under : “48. Section 11(6-A) added by the 2015 Amendment, reads as follows: “11(6-A) The Supreme Court or, as the case may be, the High Court, while considering any application Under Sub-section (4) or Sub-section (5) or Sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.” (emphasis supplied) From a reading of Section 11(6A), the intention of the legislature is crystal clear i.e. the Court should and need only look into one aspect-the existence of an arbitration agreement. What are the factors for deciding as to whether there is an arbitration agreement is the next question. The resolution to that is simple-it needs to be seen if the agreement contains a Clause which provides for arbitration pertaining to the disputes which have arisen between the parties to the agreement. .. 59. The scope of the power under Section 11(6) of the 1996 Act was considerably wide in view of the decisions in SBP and Co. vs. Patel Engg. Ltd., (2005) 8 SCC 618 and National Insurance Co. Ltd. vs. Boghara Polyfab (P) Ltd. (2009) 1 SCC 267 . This position contained till the amendment brought about in 2015. After the amendment, all that the courts need to see is whether an arbitration agreement exists-nothing more, nothing less. The legislative policy and purpose is essentially to minimise the Court’s intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11(6-A) ought to be respect.” 39.
After the amendment, all that the courts need to see is whether an arbitration agreement exists-nothing more, nothing less. The legislative policy and purpose is essentially to minimise the Court’s intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11(6-A) ought to be respect.” 39. This judgment was followed by the Apex Court in case of Mayavati Trading Pvt. Ltd. (supra), in which in para 10, Court held as under : “This being the position, it is clear that the law prior to the 2015 Amendment that has been laid down by this court, which would have included going into whether accord and satisfaction has taken place, has now been legislatively overruled. This being the position, it is difficult to agree with the reasoning contained in the aforesaid judgment as Section 11(6A) is confined to the examination of the existence of an arbitration agreement and is to be understood in the narrow sense as has been laid down in the judgment in Duro Felguera, S.A.- see paras 48 and 59.” 40. However, in case of Uttarakhand Purv Sainik Kalyan Nigam Limited (supra) the Apex Court while approving Section 11(6A) in para 9.9, held as under : “9.9. The doctrine of “Kompetenz-Kompetenz”, also referred to as “Compétence-Compétence”, or “Compétence de la recognized”, implies that the arbitral tribunal is empowered and has the competence to rule on its own jurisdiction, including determining all jurisdictional issues, and the existence or validity of the arbitration agreement. This doctrine is intended to minimize judicial intervention, so that the arbitral process is not thwarted at the threshold, when a preliminary objection is raised by one of the parties. The doctrine of kompetenz-kompetenz is, however, subject to the exception i.e. when the arbitration agreement itself is impeached as being procured by fraud or deception. This exception would also apply to cases where the parties in the process of negotiation, may have entered into a draft agreement as an antecedent step prior to executing the final contract. The draft agreement would be a mere proposal to arbitrate, and not an unequivocal acceptance of the terms of the agreement. Section 7 of the Contract Act, 1872 requires the acceptance of a contract to be absolute and unqualified.
The draft agreement would be a mere proposal to arbitrate, and not an unequivocal acceptance of the terms of the agreement. Section 7 of the Contract Act, 1872 requires the acceptance of a contract to be absolute and unqualified. [Dresser Rand SA vs. Bindal Agro-Chem Ltd. (2006) 1 SCC 751 =2006(1)Arb.LR 171 (SC)=2006 SCACTC 15(SC);See also Bharat Sanchar Nigam Ltd. vs. Telephone Cables Ltd., (2010) 5 SCC 213 = 2010(4) Arb.LR 218 (SC)=2010 SCACTC 113 (SC);Refer to PSA Mumbai Investments PTE Ltd. vs. Board of Trustees of the Jawaharlal Nehru Port Trust & Anr. (2018) 10 SCC 525 = 2018(5) Arb.LR 185 (SC).] If an arbitration agreement is not valid or non-existent, the arbitral tribunal cannot assume jurisdiction to adjudicate upon the disputes. Appointment of an arbitrator may be refused if the arbitration agreement is not in writing, or the disputes are beyond the scope of the arbitration agreement. Article V(1)(a) of the New York Convention states that recognition and enforcement of an award may be refused if the arbitration agreement ‘is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made’.” 41. Thus from the reading of the amendment brought in the year 2015 through Section 11(6A), the words existence of an arbitration clause has to be seen and nothing more or nothing less is to be seen by the Court which has now the approval of the Apex Court through the above judgments. But in the present case the dispute arose in the year 1994 when the claim of the applicant Company was rejected by the respondent-Development Authority and the arbitration clause was invoked in 1995 and an Arbitrator was appointed. Thus, the applicant after 25 years cannot come and claim the benefit of the amended provision of Section 11(6A) when once he had already availed the remedy as provided in the agreement clause 46 and the matter had travelled up to the Apex Court and his Review Petition being rejected on 20.8.2008. 42. In the present case, arbitral proceedings were already pending, when the application under Section 11 was moved. It was only after exchange of pleadings that relief was tried to be moulded by the applicant for terminating the mandate of earlier Arbitrator and he be substituted by another Arbitrator. 43.
42. In the present case, arbitral proceedings were already pending, when the application under Section 11 was moved. It was only after exchange of pleadings that relief was tried to be moulded by the applicant for terminating the mandate of earlier Arbitrator and he be substituted by another Arbitrator. 43. As already discussed above, the remedy lies under Section 14(2) of the Act, where the party has to approach the “Court” for getting the mandate terminated and no conjoint petition under Section 11 and 14 can be filed in view of decision of the Apex Court in case of Grid Corporation of Orissa Ltd. (supra). 44. The second point canvassed by the applicant’s counsel as to the applicability of the new Act, which came into force in the year 1996 and subsequent amendments made in 2015 being applicable in the present case as Clause 46 of the agreement mandated for statutory modification, thus the Court can only examine issue in relation to existence of arbitration clause and any other issue to be decided by the Arbitrator cannot be accepted in entirety. In the present case though the new Act is applicable as it is saved by Clause 46 read with Section 85(2)(a) of the Act of 1996, but as arbitral proceedings were already on and the matter being remitted by this Court on 20.09.2001, the applicant did not make any effort to get the mandate of the Arbitrator terminated without undue delay. 45. As already held above, the applicant has to get the mandate of the Arbitrator terminated in pursuance of Section 14(2) of the Act and no relief can be granted to him as claimed under Section 11(6A) of the Act by appointing a new Arbitrator pursuant to the notice dated 12.8.2019 invoking arbitration clause 46 de novo, while the mandate of the earlier Arbitrator has not come to an end. 46. It is pertinent to mention at this juncture that Section 32 of 1996 Act provides for termination of proceedings. According to sub-section (1) of Section 32, arbitral proceedings stands terminated by final arbitral award or by order of Arbitral Tribunal under sub-section (2).
46. It is pertinent to mention at this juncture that Section 32 of 1996 Act provides for termination of proceedings. According to sub-section (1) of Section 32, arbitral proceedings stands terminated by final arbitral award or by order of Arbitral Tribunal under sub-section (2). Sub-section (2) envisages contingencies where an order is issued by the Tribunal terminating arbitral proceedings, in case claimant withdraws his claim, the parties agree on the termination of the proceedings or where the arbitral Tribunal finds continuation of the proceedings has for any other reason become unnecessary or impossible. Sub-Section (3) of Section 32 provides that mandate of Arbitral Tribunal shall terminate with the termination of arbitral proceedings, meaning thereby that unless and until the arbitral proceedings are concluded, the mandate of Arbitral Tribunal does not come to an end. 47. But the termination of mandate of the Arbitrator, as provided under Section 14 is different from the termination of arbitral proceedings. Though mandate of an Arbitrator can be terminated but that would not mean that the arbitration proceedings have also terminated. In the present context, neither the earlier arbitration proceedings had concluded nor any effort was made by the applicant to get the mandate of the Arbitrator terminated from the “Court”. 48. Thus the provisions of Section 11(6A) of the Act cannot be pressed into by the applicant, as in the eye of law, the earlier proceedings still exist and no new Arbitrator can be appointed by mere fresh invocation of clause 46. The argument raised is a fallacy and cannot be accepted. 49. It has never been the intention of legislature or the various decisions rendered by the Apex Court that Section 11(6A) will come into play in those cases in which the arbitral proceedings had already commenced under the old Act and continued under the Act 1996, that a new Arbitrator is appointed and the Court will not consider the earlier proceedings which had taken place in regard to the same agreement and will proceed to appoint a new Arbitrator. 50.
50. Reliance placed by learned counsel on the question of appointment of Arbitrator in case of Satya and others (surpa), Kurup Engineering Company Pvt. Ltd. (supra), Singh Builders Syndicate (supra) and Cinevistaas Limited (supra) are not applicable in the present case as this application under Section 11 has been filed seeking invocation of the arbitration clause 46 in the year 2019 without disclosure that already arbitral proceedings had been set in motion on the behest of the applicant himself in the year 1996, in which the mandate of the Arbitrator was never terminated by the competent Court at the behest of the parties. 51. The claim of applicant that the Arbitral Tribunal did not proceed after 2008 without undue delay and having lost its mandate can only be adjudicated upon by the Court, and only after that a new Arbitral Tribunal can be substituted by appointment of another Arbitrator. 52. It is the applicant who for last 12 years never took any initiative for getting the mandate terminated and in present proceedings also concealment to the said effect that the mandate of Arbitral Tribunal stood terminated was never raised in the application itself. 53. No benefit can be extended to the applicant on the decision relied upon by him as the present case is totally distinguishable and the applicant had himself abandoned the arbitral proceedings after 2015 and no initiative was taken by him without undue delay in approaching the “Court” as defined in Section 2(1)(e) and the present application has been filed under Section 11 before this Court for initiation of fresh arbitral proceedings. 54. The word used in Section 14(1)(a) “undue delay” means that the dispute between the parties had to be resolved in the time prescribed in the agreement, time agreed between the parties or at the earliest without going into the legal technicalities as the same would frustrate the object of the Act. The applicant himself is also guilty to the extent in not approaching the Court for getting the mandate terminated without undue delay and no explanation has either been put forward by him to explain this inordinate delay of 12 years in getting a substitute Arbitrator appointed for deciding the matter afresh. 55. As already pointed out by learned counsel for the respondent that applicant is trying to give life to a dead claim, which cannot be arbitrated upon.
55. As already pointed out by learned counsel for the respondent that applicant is trying to give life to a dead claim, which cannot be arbitrated upon. Section 16(3) of the 1940 Act (old Act) provides that in case the Court remits the award to Arbitrator or umpire for reconsideration, award shall become void on failure of the Arbitrator or umpire to reconsider it and submit his decision within time fixed. 56. Section 3 of the first schedule to the old Act provides the time limit of four months within which the Arbitrator after entering on the reference has to make the award. As it is evident that after the review petition was rejected, the applicant had approached the Arbitrator on 18.9.2008 but arbitral proceedings did not commence nor any effort was made to get the mandate terminated. The argument raised by learned counsel for the respondent that proceedings shall continue according to the old Act cannot be accepted as Clause 46 clearly provides that Arbitration Act, 1940 or the statutory amendment made therein shall be applicable between the parties in case of dispute. The dispute, which started in the year 1995 was carried after the amendment in 1996 and the proceedings were decided as per the new Act. Further saving clause 85(2)(a) also provides that the new Act shall apply to arbitral proceedings which had commenced before this Court unless otherwise agreed by the parties. However, in the present case the parties had already agreed to submit as per the amended provisions of 1940 Act, meaning thereby that the new Act is applicable in the present dispute. 57. I have carefully considered the rival submission of the parties and the material on record and find that the application, which has been ostensibly moved under Section 11 of the Act, 1996 for appointment of Arbitrator invoking arbitration clause in the year 2019 does not warrant any interference of this Court as the applicant had completely failed to disclose that earlier arbitral proceedings in regard to the dispute which was initiated in the year 1996 had not come to an end, neither any prayer has been made for terminating the mandate of the Arbitrator nor any prayer has been made for the substitution of Arbitrator and simplicitor the application under Section 11 has been moved invoking the arbitration clause 46. 58.
58. This Court does not find any need to interfere, as this application is totally misconceived and is hereby dismissed.