Valecha Engineering Limited, a company incorporated in India v. State Highways Authority of Jharkhand, established under the State Highways Authority of Jharkhand Act, 2007
2022-04-28
SUJIT NARAYAN PRASAD
body2022
DigiLaw.ai
JUDGMENT : The instant application has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of Arbitrator, in view of the Arbitration Clause as contained under Clause 26.3 of the contract. 2. The grievance of the petitioner is that the contract has been entered in between the parties on 30.03.2015 for execution of the work i.e., for strengthening, widening and reconstruction of Ghaghra-Netarhat (SH-9) road, allotted in favour of the petitioner in terms of advertisement ref. No.RFQ-RFP/SHAJ/01/2014 dated 30.09.2014. 3. According to the petitioner, after completion of the work, some dispute pertaining to money claim has arisen, therefore, the petitioner has invoked the Arbitration Clause as stipulated under Clause 26.3 of the contract, which is appended as Annexure-1 to the application. According to the petitioner, even though, the petitioner has resorted to the conciliation process as per the condition stipulated under Clause 26.2, which contains a condition that before invoking the arbitration clause as per the condition stipulated under Clause 26.3, the matter will be tried to be resolved through conciliation but even though, efforts have been taken by the petitioner for resolution of the dispute through conciliation as per the condition stipulated under Clause 26.2 but the respondent has not made any correspondence to such efforts and therefore, the instant application has been filed for invoking the jurisdiction conferred to this Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of Arbitrator for resolution of dispute. 4. The respondent State had appeared and has contested the case by making the submission that the ground which has been taken on behalf of the petitioner in resorting to the condition stipulated under Clause 26.2 of the contract has never been availed, since, no such application has been submitted before the concerned Engineer, wherein, as per the condition stipulated under Clause 26.2, the application for conciliation was to be filed before the concerned Engineer. According to the respondent, the said application was filed before the Chief Executive Officer as also the Chairman, as would appear from Annexure-3 dated 30.11.2019 to the application. 5. Learned counsel for the respondent, in the backdrop of the aforesaid fact, has submitted that it is not a fit case where the Arbitrator is to be appointed by invoking the jurisdiction conferred to this Court under Section 11(6)(C) of the Arbitration and Conciliation Act. 6.
5. Learned counsel for the respondent, in the backdrop of the aforesaid fact, has submitted that it is not a fit case where the Arbitrator is to be appointed by invoking the jurisdiction conferred to this Court under Section 11(6)(C) of the Arbitration and Conciliation Act. 6. This Court has heard the learned counsel for the parties and considered the documents appended to the application as also the agreement. 7. The factual aspect is not in dispute so far as it relates to the allotment of work in favour of the petitioner in pursuant to the advertisement dated 30.09.2014. 8. According to the petitioner, the work has been concluded and thereafter, the bill was submitted for releasing of the amount which has incurred in execution of the work, but, the amount has not been disbursed, therefore, the petitioner has made an application by invoking the conciliation clause as stipulated under Clause 26.2 of the contract, as would appear from Annexure-3 dated 30.11.2019. But according to the petitioner, no correspondence has ever been made in response to the application in terms of Clause 26.2 of the contract, therefore, the instant application has been filed. 9. The respondent has made opposition to the prayer made in the instant application by taking the plea that under the condition as contained under Clause 26.2, an appropriate application for conciliation was required to be filed before the concerned Engineer but having not done so, therefore, it is not a fit case for appointment of Arbitrator by invoking the condition stipulated under Clause 26.3 of the contract. According to the respondent, since the condition stipulated under Clause 26.3 can only be allowed to be raised, if the condition stipulated under Clause 26.2, for conciliation of the dispute, has been resorted to. But, the condition stipulated under Clause 26.2, since, has not been resorted to, therefore, it is not a fit case where the Arbitrator can be appointed in pursuant to the Clause 26.3 of the agreement. 10. This Court, on perusal of the Arbitration Agreement has found therefrom that two conditions which are relevant for the purpose of passing appropriate order in the instant case i.e., Clause 26.2 and Clause 26.3.
10. This Court, on perusal of the Arbitration Agreement has found therefrom that two conditions which are relevant for the purpose of passing appropriate order in the instant case i.e., Clause 26.2 and Clause 26.3. For ready reference Clause 26.2 of the agreement reads as under:- “26.2 Conciliation In the event of any Dispute between the Parties, either Party may call upon the Authority’s Engineer, or such other person as the Parties may mutually agree upon (the “Conciliator”) to mediate and assist the Parties in arriving at an amicable settlement thereof, Failing mediation by the Conciliator or without the intervention of the Conciliator, either Party may require such Dispute to be referred to the Chairman of the Authority and the Chairman of the Board of Directors of the Contractor for amicable settlement, and upon such reference, the said person shall meet no later than 7 (seven) business days from the date of reference to discuss and attempt to amicably resolve the Dispute. If such meeting does not take place within the 7 (seven) business day period or the Dispute is not amicably settled within 15 (fifteen) days of the meeting or the Dispute is not resolved as evidenced by the signing of the written terms of settlement within 30 (thirty) days of the notice in writing referred to in Clause 26.1.1 or such longer period as may be mutually agreed by the Parties, either Party may refer the Dispute to arbitration in accordance with the provisions of Clause 26.3.” For ready reference Clause 26.3 of the Agreement also reads as under:- “26.3 Arbitration 26.3.1 Any Dispute which is not resolved amicably by conciliation, as provided in Clause 26.2, shall be finally decided by reference to arbitration by a Board of Arbitrators appointed in accordance with Clause 26.3.2. Such Arbitration shall be held in accordance with the Rules of Arbitration of the International Centre for Alternate Dispute Resolution, New Delhi (the “Rules”), or such other rules as may be mutually agreed by the Parties, and shall be subject to the provisions of the Arbitration Act. The venue of such arbitration shall be Ranchi and the language of arbitration proceedings shall be English.
The venue of such arbitration shall be Ranchi and the language of arbitration proceedings shall be English. 26.3.2 There shall be Board of three arbitrators, of whom each party shall select one, and the third arbitrator shall be appointed by the two arbitrators so selected and in the event of disagreement between the two arbitrators, the appointment shall be made in accordance with the Rules. 26.3.3 The arbitrators shall make a reasoned award (the “Award”). Any Award made in any arbitration held pursuant to this Article 26 shall be final and binding on the Parties as from the date it is made, and the Contractor and the Authority agree and undertake to carry out such Award without delay. 26.3.4 The Contractor and the Authority agree than an Award may be enforced against the Contractor and/or the Authority, as the case may be, and their respective assets whatever situated. 26.3.5 This Agreement and the rights and obligations of the Parties shall remain in full force and effect, pending the Award in any arbitration proceedings hereunder. 26.3.6 In the event the Party against whom the Award has been granted challenges the Award for any reason in a court of law, it shall make an interim payment to the other Party for an amount equal to 75% (seventy five per cent) of the Award, pending final settlement of the Dispute. The aforesaid amount shall be paid forthwith upon furnishing an irrevocable Bank Guarantee for a sum equal to 120 % (one hundred and twenty per cent) of the aforesaid amount.
The aforesaid amount shall be paid forthwith upon furnishing an irrevocable Bank Guarantee for a sum equal to 120 % (one hundred and twenty per cent) of the aforesaid amount. Upon final settlement of the Dispute, the aforesaid interim payment shall be adjusted and any balance amount due to be paid or returned, as the case may be, shall be paid or returned with interest calculated at the rate of 10% (ten per cent) per annum from the date of interim payment to the date of final settlement of such balance.” It is thus, evident from condition stipulated as under Clause 26.2 of the agreement, wherein, it has been agreed in between the parties that in the event of any Dispute between the Parties, either Party may call upon the Authority’s Engineer, or such other person as the Parties may mutually agree upon (the “Conciliator”) to mediate and assist the Parties in arriving at an amicable settlement thereof, Failing mediation by the Conciliator or without the intervention of the Conciliator, either Party may require such Dispute to be referred to the Chairman of the Authority and the Chairman of the Board of Directors of the Contractor for amicable settlement, and upon such reference, the said person shall meet no later than 7 (seven) business days from the date of reference to discuss and attempt to amicably resolve the Dispute. If such meeting does not take place within the 7 (seven) business day period or the Dispute is not amicably settled within 15 (fifteen) days of the meeting or the Dispute is not resolved as evidenced by the signing of the written terms of settlement within 30 (thirty) days of the notice in writing referred to in Clause 26.1.1 or such longer period as may be mutually agreed by the Parties, either Party may refer the Dispute to arbitration in accordance with the provisions of Clause 26.3. The objection which has been made on behalf of the respondent that no such application has been filed before the Authority’s Engineer, as referred under Clause 26.2 of the agreement. 11. This Court in order to answer the said issue has gone across the communication dated 30.11.2019, which according to the petitioner, was an application made in terms of the condition stipulated under Clause 26.2 of the Agreement.
11. This Court in order to answer the said issue has gone across the communication dated 30.11.2019, which according to the petitioner, was an application made in terms of the condition stipulated under Clause 26.2 of the Agreement. It has been found therefrom that the petitioner has made correspondence in the address of the Chief Executive Officer referring therein the dispute and requesting for its amicable settlement through conciliation. It is, thus, evident that such correspondence invoking the condition stipulated under Clause 26.2 of the Agreement, has been made to the Chief Executive Officer of the State Highway Authority of Jharkhand, admittedly, not to the Authority’s Engineer. It has been submitted on that ground the application has been rejected, vide order dated 30.12.2019 (Anneuxre-4) passed by the Member (Technical), State Highways Authority of Jharkhand, Ranchi. Admittedly, the petitioner has made an application for resolution of the dispute through conciliation vide letter dated 30.11.2019, appended as Annexure-3 to the application. It appears that there is no rejection of the aforesaid communication by taking any decision, save and except, a communication to the petitioner vide communication dated 30.12.2019 to the effect that the contract agreement of the petitioner was terminated on 29.07.2019 by invoking the condition stipulated under Clause 23.1. 12. It requires to refer herein that under the agreement there is no definition or meaning of the Authority’s Engineer. Therefore, in absence of any definition of the word “Authority’s Engineer”, it cannot be accepted that whatever application has been filed by the petitioner to the address of the Chief Executive Officer, will not be treated to be Authority’s Engineer. It further requires to refer herein that no affidavit in rebuttal to the contention made by the petitioner in the arbitration application has been filed and therefore, in opposition to the instant application, the oral submission which has been made on behalf of the respondent State, cannot be accepted. 13. This Court, therefore, is of the view that if such oral objection is being made, the question would be that who has prevented the State respondent to file an affidavit by taking the specific plea that the Authority’s Engineer cannot be compared with the Chief Executive Officer of the State Highways Authority of Jharkhand. There is no reference of any Authority’s Engineer even in the agreement. 14.
There is no reference of any Authority’s Engineer even in the agreement. 14. Be that as it may, it is not in dispute that an application was filed by the petitioner dated 30.11.2019 to the Chief Executive Officer for resolution of dispute through conciliation, but no response to that has been made on behalf of the respondent, save and except, the communication dated 30.12.2019 about termination of contract on 29.07.2019. 15. This Court on going through the documents and discussion made hereinabove is of the considered view that when the petitioner has invoked the condition stipulated under Clause 26.2 by making correspondence, it ought to have been responded by the concerned authority, but having not done so, now it cannot be allowed to take the plea about non-invoking the condition as under Clause 26.2, therefore, the argument to the effect that proper application, since has not been filed before the competent authority in terms of Clause 26.2, is hereby rejected. It further appears from the condition stipulated under Clause 26.3, as referred and quoted above, whereby and whereunder, it has been agreed in between the parties that in case of any dispute which is not resolved amicably by conciliation, as provided in Clause 26.2, shall be finally decided by reference to arbitration by a Board of Arbitrators appointed in accordance with Clause 26.3.2. It is evident from going through the condition stipulated under Clause 26.3 of the Contract that the Arbitrator will be appointed if the dispute is not resolved amicably by conciliation, as provided in Clause 26.2, therefore, this Court is of the considered view that since the respondent has not responded to the request made by the petitioner for resolution of dispute through conciliation as per the condition stipulated under Clause 26.2, therefore, the petitioner has invoked the jurisdiction of this Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of Arbitrator, as such, in the facts of the given case, it require to pass an order for appointment of Arbitrator. 16. Accordingly, the instant application stands allowed. 17. It has been submitted on behalf of the petitioner that one Arbitrator, namely, Hon’ble Dr. Justice Satish Chandra, (Retd.), Former Judge of the Allahabad High Court, has already been appointed by the petitioner. The petitioner vide letter dated 08.02.2020 informed the respondent about the appointment of Hon’ble Dr.
16. Accordingly, the instant application stands allowed. 17. It has been submitted on behalf of the petitioner that one Arbitrator, namely, Hon’ble Dr. Justice Satish Chandra, (Retd.), Former Judge of the Allahabad High Court, has already been appointed by the petitioner. The petitioner vide letter dated 08.02.2020 informed the respondent about the appointment of Hon’ble Dr. Justice Satish Chandra, (Retd.) but due to lapse of more than 30 days from the date of receipt of the Arbitration Notice, the respondent has failed to appoint the Arbitrator. It has further been submitted that for appointment of second Arbitrator, due request was made but no endeavour has been taken for appointment of Arbitrator and as such, this Court, therefore, deems it fit and proper to appoint the second Arbitrator, on the basis of discussion made above. 18. This Court after considering the aforesaid submissions and the applications dated 08.01.2020 (Annexure-5) and 08.02.2020 (Annexure-8), whereby and whereunder, the petitioner has made a request from the concerned respondent State for appointment of second Arbitrator, in view of the condition stipulated, as under Clause 26.3 of the Contract but the State having not appointed the Arbitrator, deems it fit and proper to appoint the Arbitrator invoking the jurisdiction conferred to this Court under Section 11(6)(C) of the Arbitration and Conciliation Act, 1996. 19. It has been informed to this Court on behalf of the learned counsel for the respondent that Hon’ble Mr. Justice D.K. Sinha (Retd.), Former Judge of this Court, may be appointed as Arbitrator for resolution of the dispute in between the parties. 20. Considering the aforesaid suggestion, this Court, therefore, appoints Hon’ble Mr. Justice D.K. Sinha (Retd.), Former Judge of this Court presently residing at D/4001, Green Residency, Nalanda Colony, Budha Vihar, Bariyatu, Ranchi-834001, to act as second Arbitrator. 21. The proposed Arbitrator is required to submit a declaration in terms of Section 12 of Arbitration and Conciliation Act, 1996. 22. Learned Arbitrator would be free to lay down fees and other expenses towards conduct of the arbitration proceedings, however, keeping into account the ceiling prescribed under Schedule IV of the Act of 1996 as amended. 23. Let photocopy of the entire pleadings along with copy of the entire order sheet be sent to the learned Arbitrator by the Registry. 24. Pending Interlocutory Application(s), if any, also stands disposed of.