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Madhya Pradesh High Court · body

2020 DIGILAW 810 (MP)

BANSAL AND COMPANY v. UNION OF INDIA

2020-08-17

SHEEL NAGU

body2020
ORDER/JUDGMENT – Shri Arvind Dudawat, learned counsel for applicant. Shri Vivek Khedkar, learned Assistant Solicitor General for the respondents-Union of India. Learned counsel for the rival parties are heard through video conferencing. The present petition under section 11 of the Arbitration and Conciliation Act, 1996 (for brevity Act, 1996) has been filed by applicant-Company seeking appointment of sole arbitrator to settle the dispute raised by applicant arising out of agreement in question concerning the work of external electric supply of Married Accn Project Phase-II Gwalior. The applicant is before this Court since despite raising dispute vide P/12 before the respondents under Clause 70 of the agreement and despite having consented for waiver as sought by respondents under section 12(5) of 1996 Act, the respondents have failed to appoint an arbitrator in accordance with Clause 70 of the agreement. 2. Leaned counsel for applicant submits that consent for waiver under section 12(5) of 1996 Act was submitted by petitioner vide P/14 but despite of elapse of sufficient time no steps have been taken for appointment of arbitrator by the competent authority which according to the rival parties is the Engineer-in-chief, Military Engineering Services (MES in short) Headquarters New Delhi. 2.1 Leaned counsel for respondents-Union of India by referring to section 12(5) and Seventh Schedule of the amended 1996 Act, submits that arbitration clause provides for appointment of sole arbitrator who has to be an Engineer Officer and therefore no third party can be appointed as an arbitrator by this Court under section 11(6) of 1996 Ac for which reliance is placed on the decision of Apex Court in Union of India vs. Parmar Construction Company, AIR 2019 SC 5522 and also the recent decision rendered by Apex Court on 14-7-2020 in State Trading Corporation of India Ltd. vs. Jindal Steel and Power Limited in Civil Appeal No(s). 2747 of 2020. 2.2 Per contra, learned counsel for the applicant submits that Schedule Seventh read with section 12(5) of the amended 1996 Act renders an arbitrator who is an employee/officer of the MES to be disqualified for being eligible to be appointed as an arbitrator. As such it is submitted by learned counsel for the applicant that even if such officer/employee of the MES holds qualification of an Engineering he cannot be appointed as an arbitrator. Therefore prayer is made for appointment of an independent arbitrator to resolve the dispute. As such it is submitted by learned counsel for the applicant that even if such officer/employee of the MES holds qualification of an Engineering he cannot be appointed as an arbitrator. Therefore prayer is made for appointment of an independent arbitrator to resolve the dispute. 2.3 After having heard learned counsel for the rival parties and having gone through the verdicts of Apex Court cited (supra), this Court is of the considered view that an independent arbitrator in this matter cannot be appointed for the simple reason that the arbitration clause in the agreement in question stipulates in express terms that the dispute shall be referred to a serving officer having a degree in Engineering or equivalent final/direct final examination in subdivision-II of Indian Institution of Surveyor recognized by Government of India with further stipulation that such person shall be appointed by the Engineer-in-chief or officiating Director General of Works Headquarters New Delhi. The relevant provision of the agreement though extracted in para 8 of the petition is being reproduced below for ready reference and convenience along with clause 70 of the agreement : – “(a) To execute all the works referred to in the said documents upon the terms and conditions contained or referred to therein and as detailed in the General Summary hereinafter and out such deviations as may be ordered vide Condition 7 of IAFW – 2249 up to maximum (Ten Percent). Further agree to refer all disputes, as required by Condition 70 to arbitration of a serving officer having degree in Engineering or equivalent final/direct final examination in subdivision–II of Indian Institution of Surveyor of recognized by Govt. of India to be appointed by the Engineer-in-Chief or officiating Director General of Works if specifically delegated in writing by Engineer-in-Chief Headquarters, New Delhi whose decision shall be final, conclusive and binding. ***** ***** ***** ***** Arbitration Clause Condition 70 – 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 Contract expressed to be final and binding) shall, after written notice by either party to the Contract to the other of them, be referred to the sole arbitration of an Engineer Officer 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 hereof. Provided that in the event of abandonment of the Works or cancellation of the Contract under Condition Nos. 52, 53 or 54 hereof, such reference shall not take place until alternative arrangements have been finalized by the Government to get the Works completed by or through any other Contractor or Contractors or Agency or Agencies. Provided always that commencement or continuance of any arbitration proceeding hereunder or other-wise shall not in any manner militate against the Government’s right to recovery from the contractor as provided in Condition 67 hereof. If the Arbitrator so appointed resigns his appointment or vacates his office or is unable or unwilling to act due to any reason whatsoever, the authority appointing him may appoint a new Arbitrator to act in his place. The Arbitrator shall be deemed to have entered on the reference on the date he issue notice to both the parties, asking them to submit to him their statement of the case and pleadings in defense. The Arbitrator may proceed with the Arbitration, ex-party, if either party, in spite of a notice from the Arbitrator fails to take part in the proceedings. The Arbitrator may, from time to time with the consent of the parties, enlarge, the time up to but not exceeding one year from the date of his entering on the reference, for making and publishing the award. The Arbitrator shall give his award within a period of six months from the date of his entering on the reference or within the extended time as the case may be on all matters referred to him and shall indicate his findings, along with sums awarded, separately on each individual item of dispute. The venue of Arbitration shall be such place or places as may be fixed by the Arbitrator in his sole discretion. The Award of the Arbitrator shall be final and binding on both parties to the Contract.” 2.4 It is trite law in the field of arbitration that jurisdiction of this Court under section 11(6) of the 1996 Act can be invoked to do something which as per the agreement has not been done as regards appointment of arbitrator. The Award of the Arbitrator shall be final and binding on both parties to the Contract.” 2.4 It is trite law in the field of arbitration that jurisdiction of this Court under section 11(6) of the 1996 Act can be invoked to do something which as per the agreement has not been done as regards appointment of arbitrator. It is further settled in law that if parties have agreed in the agreement to appoint a particular person holding a particular position and/or qualification to be appointed as an arbitrator then this Court in the limited jurisdiction under section 11(6) of the 1996 Act cannot appoint an independent person as an arbitrator. 3. This Court cannot travel beyond the parameters agreed to by the rival parties in the agreement as regards the person to be appointed as an arbitrator. 3.1 However, it has to be kept in mind that the person so appointed as per the agreement does not suffer from any disqualification/ineligibility as per section 12(5) read with Seventh Schedule of the amended Act, 1996. 4. Before parting this Court would be failing in its duty to consider the decisions of the Apex Court relied upon by the parties. 4.1 The decision in the case of State Trading Corporation of India Ltd (supra) relied upon by respondents-Union of India is of no avail since the same does not relate to the provision of section 11(6) of the Act but to a dispute which arose by invoking section 9 of the 1996 Act. 4.2 As regards the decision in case of Union of India vs. Parmar Construction Company (supra) relied upon by respondents, same is relevant as it explains the contours of section 11(6) by laying down that if parties to the agreement have agreed for a person holding a particular description of position/qualification to be appointed as an arbitrator, then the High Court’s jurisdiction under section 11(6) to appoint an independent arbitrator gets ousted. 5. 5. Consequently, this petition is disposed of in following terms : – (1) The competent authority i.e., Engineer-in-chief, MES Headquarters New Delhi is directed to appoint a person satisfying the description as agreed to by the parties in the agreement, as an arbitrator provided the said person does not suffer disqualification mentioned in section 12(5) read with Seventh Schedule of the amended 1996 Act, within a period of one month from the date of receipt of this order. (2) The sole arbitrator so appointed shall initiate, conduct and conclude the arbitral proceedings within the time frame provided in the amended 1996 Act. Since the applicant has been compelled to knock the door of this Court without any justifiable reason and that precious time of this Court is consumed to adjudicate this avoidable piece of litigation, this Court deems it appropriate to impose cost of Rs. 5,000/- (Rupees five thousand only) on the respondents-Union of India to be paid to the applicant within one month from the date of receipt of this order.