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2022 DIGILAW 627 (JK)

R. S. Construction v. State Bank of India

2022-11-11

ALI MOHAMMAD MAGREY

body2022
JUDGMENT : Ali Mohammad Magrey, J. 1. The instant petition has been filed under section 11(6) of the Jammu and Kashmir Arbitration and conciliation Act, 1997, for appointment an Arbitrator in terms of Clause 45 of the Agreement. Clause 45 of the agreement being relevant is extracted as under:- "45. ARBITRATION (A) All disputes or differences of any kind whatsoever which shall be at any time arise between the parties have to be touching or concerning the work or the execution or maintenance thereof of this contract or the rights touching or concerning the work or the execution or maintenance thereof of this contract or the construction remaining operation or effect thereof or to the right or liabilities of the parties or arising out of the relation thereto whether during or after determination, fore closure or breach of the contract (other than those in respect of which the decision of any 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 and to the Appointing Authority who shall be appointed for this purpose by the Employer (SBI) be referred for adjudication to a sole Arbitrator to be appointed as hereinafter provided. (B) It is also a term of the contract that if Contractor do/does not make any demand for arbitration in respect of any claim(s) within 90 days of receiving intimation from SBI/Architect that the bill after due verification is passed for payment of a lesser amount, or he has accepted the payment as per clause 34(b) whichever is earlier or otherwise, the Contractor's right under this agreement to refer to arbitration shall be deemed to have been forfeited and SBI/Architect shall be relieved and discharged of their liability under this agreement in respect of such claim. Further, it is agreed that for the purpose of the Claim such notice is deemed to have been received by the Contractor(s) within 2 days of posing of the letter by SBI/Architect or when delivered by hand immediately after receipt thereof by the Contractor(s), whichever is earlier. Further, it is agreed that for the purpose of the Claim such notice is deemed to have been received by the Contractor(s) within 2 days of posing of the letter by SBI/Architect or when delivered by hand immediately after receipt thereof by the Contractor(s), whichever is earlier. Further, a letter signed by the officials of SBI/Architect that the letter so posted to the Contractor(s) shall be conclusive for the purpose of appointing the sole Arbitrator referred to 3 AA No. 19/2009 above, the Appointing Authority will send within thirty days of receipt by him of the written notice, aforesaid to the Contractor, a panel of three names of persons who shall be presently unconnected with the Organization for which the work is executed from the following categories of Arbitrators. i. Retired High Court/Supreme Court Judges, who have experience in handling Arbitration cases. ii. Members of Council of Arbitration. iii. Fellow of the Institution of Engineers, or Indian Institute of Architects. iv. Eminent Retired Chief Engineers from State/Central P.W.D/ Public Sector Undertakings, of good reputation and integrity. (C) The Contractor shall on receipt of the names as aforesaid select any one of the persons named to be appointed as a sole Arbitrator and communicate his name to the Appointing Authority within thirty days of receipt by him of the names. The Appointing Authority shall thereupon without any delay appoint the said person as the sole Arbitrator. If the Contractor fails to communicate such selection as provided above within the specified, the Appointing Authority shall make the selection and appoint the selected person as the Sole Arbitrator. (D) If the Appointing Authority fails to send the Contractor, the panel of three names as aforesaid within the period specified, the Contractor shall send to the Appointing Authority a Panel of three names of persons out of the above mentioned four categories of Arbitrators who shall all be unconnected with either party. The appointing Authority shall on receipt by him of the names as aforesaid select any one of the people named and appoint him as the sole Arbitrator. The appointing Authority shall on receipt by him of the names as aforesaid select any one of the people named and appoint him as the sole Arbitrator. If the Appointing Authority fails to select 4 AA No. 19/2009 the person and appoint him as the sole Arbitrator 30 days of receipt by him of the panel and the Contractor accordingly, the Contractor shall be entitled to appoint one of the person from the panel as the sole Arbitrator and communicate name to the Appointing Authority. (E) If the Arbitrator so appointed is unable or unwilling to act or resigns his appointment or vacates his office due to any reason whatsoever another sole Arbitrator shall be appointed as aforesaid. (F) The work under the Contract shall, however, continue during the arbitration proceedings and no payment due or payable to the Contractor shall be with held on account of such proceedings. (G) The Arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties fixing the date of the first hearing. (H) The Arbitrator may from time to time, with the consent of the parties, enlarge the time for making and publishing the award. (I) The Arbitrator shall give a separate award in respect of each dispute or difference referred to him. The Arbitrator shall decide each dispute in accordance with the terms of the contract. The venue of arbitration shall be such place as may be fixed by the Arbitrator in his sole discretion. (J) In all cases, where the amount of claim in dispute is Rs.75,000/- (Rupees seventy-five thousands only) and above, the Arbitrator shall give reasons for the award. (K) The fees, if any, of the Arbitrator shall, if required to be paid before the award is made and published, be paid half and half by each of the parties. The cost of the reference and of the award including the fees if any, of the Arbitrator who may direct to and by whom and in what manner, such costs or any part thereof shall be paid and may fix or settle the amount of costs to be so paid. 5 AA No. 19/2009. (L) The award of the Arbitrator shall be final and binding on both the parties. 5 AA No. 19/2009. (L) The award of the Arbitrator shall be final and binding on both the parties. Subject to aforesaid the provisions of the Arbitration Act, 1996 or any statutory modification or reenactment thereof and the rules made thereunder, and for the time being inforce, shall apply to the Arbitration proceedings under this clause". 2. Mr. Sumeet Bhatia, learned counsel appearing for the respondents submits that in terms of Clause 8 of the agreement dated 29th August, 2003, this Court has no jurisdiction to appoint the Arbitrator. Clause 8 of the agreement being relevant is taken note of:- "Any dispute arising under this agreement between the parties hereto shall be referred for adjudication to a sole arbitrator in Chandigarh in the matter and in terms of the provisions laid down in Clause 45 of the General Conditions of Contract. The award of the arbitrator shall be final and binding on both the parties". 3. Perusal of the aforementioned Clause would show that the disputes between the parties were to be referred to the sole Arbitrator, to be settled in terms of the provisions of the J&K Arbitration and Conciliation Act, 1996 (for short 'Act of 1996') or any statutory modifications, re-enactment or the rules made thereunder. Admittedly, the application is filed under the Arbitration and Conciliation Act of 1997. 4. Further objection regarding the maintainability of the application is that the same cannot be filed before this Court, as the place of arbitration in terms of Clause 8 of the agreement is at Chandigarh. 5. The short issue that requires consideration is as to whether this Court has jurisdiction to entertain the present petition and appoint an Arbitrator in terms of the provisions of the Act of 1997 and also for adjudication of disputes at Chandigarh, as also for Chandigarh to be the place of adjudication, when the parties have agreed that the arbitration would be governed by the provisions of the Act of 1996. 6. Similar objections were raised before this Court in AA No. 36/2005 titled Chenab Const. Co. Ltd. & Anr. 6. Similar objections were raised before this Court in AA No. 36/2005 titled Chenab Const. Co. Ltd. & Anr. v. NHEPC & Ors., and this Court in terms of order passed on 22.11.2016, after hearing learned counsel appearing for the parties, has held that this Court has no jurisdiction to entertain the petition, for which the parties have specifically agreed to the application of the law, which has reference to the Act of 1996. 7. Mr. R.K. Gupta, learned senior counsel appearing for the applicant, faced with the objections, submits that same is not now available after the repealment of the Jammu and Kashmir Arbitration and Conciliation Act, 1997 in terms of Re-Organization Act of 2019. 8. Learned counsel appearing for the respondents submits that the law is no more res-integra, as the application for appointment of Arbitrator shall be only in terms of the provisions of law provided in the agreement and there is no scope for appointment of Arbitrator under the Act of 1996, (now repealed). Learned counsel further submits that the appointment of Arbitrator under section 11(6) can be only made by the Court where venue is located. Learned counsel has referred to and relied upon the Judgment titled Chenab Const. Co. Ltd. & Anr. v. NHEPC & Ors. Relevant para being relevant is reproduced as under:- "Clause 55: Arbitration: 55.1: Except as otherwise provided, in clause 53 herein before, all questions, disputes or differences in respect of which the decision has not been final and conclusive, arising between the contractor and the Corporation, in relation to or in connection with the contract shall be referred for arbitration in the manner provided as under and to the sole arbitrator appointed as follows: 55.8: Subject to aforesaid modifications, Arbitration Act, 1940, or any statutory modifications or re-enactment thereof and the rules made thereunder and for time being in force shall apply to the Arbitration proceedings under this clause". 9. The view is also reiterated by the Apex Court in case reported in (2019) AIR SC 3658, titled 'Brahmani River Pellets Limited v. Kamachi Industries Limited'. Paragraphs 16 and 17 of the said judgment being relevant are extracted as under:- "16. Where the contract specifies the jurisdiction of the Court at a particular place, only such Court will have the jurisdiction to deal with the matter and parties intended to exclude all other Courts. Paragraphs 16 and 17 of the said judgment being relevant are extracted as under:- "16. Where the contract specifies the jurisdiction of the Court at a particular place, only such Court will have the jurisdiction to deal with the matter and parties intended to exclude all other Courts. In the present case, the parties have agreed that the "venue" of arbitration shall be at Bhubaneswar. Considering the agreement of the parties having Bhubaneswar as the venue of arbitration, the intention of the parties is to exclude all other Courts. As held in Swastik, non-use of words like "exclusive jurisdiction", "only", "exclusive", "alone" is not decisive and does not make any material difference. 17. When the parties have agreed to have the "venue" of arbitration at Bhubaneswar, the Madras High Court erred in assuming the jurisdiction under section 11(6) of the Act. Since only Orissa High Court will have the jurisdiction to entertain the petition filed under section 11(6) of the Act, the impugned order is liable to be set aside". 10. The argument of Mr. R.K. Gupta, learned senior counsel appearing for the applicant is that the Act of 1997 stands repealed, therefore, the pending application is required to be decided in terms of the applicable law, viz. the Arbitration and Conciliation Act, 1996. The contention raised by learned senior counsel is having no force, as the Supreme Court has already taken a view that the pending application seeking appointment of an Arbitrator has reference to the rights of the parties to litigation on the date of the commencement of lis, therefore, the pending application is to be decided in terms of Clause 8 of the agreement, which has reference to the application of Arbitration and Conciliation Act, 1996. This view is supported by the Judgment of the Supreme Court delivered in case titled Raminder Singh Sethi v. D. Vijayarangam, reported as (2002) 4 SCC 675 . This view is supported by the Judgment of the Supreme Court delivered in case titled Raminder Singh Sethi v. D. Vijayarangam, reported as (2002) 4 SCC 675 . Paragraph 6 of the Judgment being relevant is taken note of:- "It was further submitted by the learned counsel for the appellant that during the pendency of this appeal the Karnataka Rent Act, 1999 has come into force with effect from 27th December, 2001 which gives additional protection to the tenant and as the proceedings for eviction are still pending and have not achieved finality the benefit of additional protection conferred by the new Act should be extended to the tenant-appellant and this Court should refuse to pass a decree for eviction unless the ground for eviction under the new Act is made out. The new Act has not been given retrospective effect. Ordinarily, the rights of the parties to litigation stand crystallised on the date of the commencement of lis. Section 70 of the new Act which speaks of Repeal and Savings and which also makes provision for the new Act being applicable to certain cases and proceedings, does not speak of the new Act being applicable to the appeal or proceedings pending before the Supreme Court. The question of testing the availability of any ground for eviction by reference to the provisions of new Act or moulding the relief by reference thereto does not arise”. 11. For the foregoing reasons, it is held that there is no jurisdiction for this Court to entertain the instant petition, which is, accordingly, dismissed. The petitioner would be at liberty to approach the appropriate Forum in accordance with law.