Executive Engineer, Water Resources, Division Bundi Rajasthan v. Subhash Infraengineers Pvt. Ltd.
2023-01-12
PANKAJ MITHAL
body2023
DigiLaw.ai
JUDGMENT : 1. Heard Mr. Vivek Tyagi, learned Deputy Government Counsel appearing for the applicant/petitioner and Mr. Manish Kataria, learned counsel for the respondent. 2. The petitioner has applied for appointment of an independent Arbitrator in accordance with the provisions of Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’), in terms of Clause 25(3) of the Conditions of the Contract. 3. The petitioner entered into a contract on 11.11.2003 with the respondent for rehabilitation of left main canal and its distribution system of Gudha Irrigation Project, Bundi in Rajasthan. The respondent-Contractor raised a claim on 03.07.2008 for payment of the remaining amount for the work done. The said claim was referred to the Adjudicator, who decided the same vide order dated 06.04.2018. The claim of the respondent-Contractor was allowed in part, therefore, the petitioner in accordance with the arbitration clause 25(2) demanded reference of the above decision to the Arbitrator. Since the said demand was not fulfilled, the petitioner has approached the Court. 4. There appears to be no dispute with regard to reference of the matter to the Adjudicator and both the sides rely upon a decision of this Court dated 27.07.2012 passed in S.B. Arbitration Application No.102/2019- Department of Water Resources, Government of Rajasthan Vs. M/s Subhash Infraengineers Pvt. Ltd., whereby the learned Single Judge has referred the decision of the Adjudicator to the Arbitrator. 5. Under the Conditions of the Contract, clause 1.1 defines “Adjudicator”, who is a person appointed jointly by the Employer and the Contractor to resolve the disputes in the first instance, as provided for in Clauses 24 and 25 of the Contract. Clause 24 of the Contract provides about the disputes and clause 24.1 provides that where the Contractor believes that the decision of the Engineer was either outside his authority or is otherwise wrong, the matter shall be referred to the Adjudicator within 14 days of the notification of the decision of the Engineer. The Adjudicator is mandated to give decision in writing within 28 days of the receipt of the dispute. Clause 25.2 of the Contract further provides that either party may refer a decision of the Adjudicator to an Arbitrator within 28 days of his decision and the arbitration shall be conducted in accordance with the arbitration procedure stated in the Special Conditions of the Contract.
Clause 25.2 of the Contract further provides that either party may refer a decision of the Adjudicator to an Arbitrator within 28 days of his decision and the arbitration shall be conducted in accordance with the arbitration procedure stated in the Special Conditions of the Contract. In view of the Conditions of the Contract, as enumerated above, the disputes between the parties are first to be referred to the Adjudicator and thereupon, if necessary, to an Arbitral Tribunal. 6. In the case at hand, the respondent-Contractor raised a claim for payment of the remaining amount of the work done on 03.07.2008. The said claim was referred to the Adjudicator in terms of Clause 24.1 of the Contract and one Mr. O.P. Saxena was appointed as the Adjudicator. The said Adjudicator vide his letter dated 10.10.2008 refused to adjudicate the matter. Accordingly, the respondent-Contractor demanded a fresh reference to the Adjudicator and submitted a notice dated 29.10.2010. The respondent-Contractor thus filed S.B. Arbitration Application No.57/2011 seeking reference of the dispute to a new Adjudicator. The Court vide order dated 03.05.2012, treating the said application to be one for appointment of an Arbitrator, disposed of the same appointing Mr. R.D. Meena, retired Chief Engineer, Irrigation Department as the Adjudicator to adjudicate the dispute. 7. Unfortunately, the aforesaid Adjudicator died without adjudicating the dispute. Accordingly, a fresh S.B. Misc. Arbitration Application No.19/2014 was filed by the respondent-Contractor for referring the dispute to an Adjudicator under Clause 24.1 of the Conditions of the Contract. The said application was disposed of by this Court vide order dated 29.07.2016 and one Mr. L.K. Agarwal, retired Chief Engineer, Water Resources Department, Jaipur, Rajasthan was appointed as the Adjudicator. The said Adjudicator decided the dispute vide order dated 06.04.2018, which is not acceptable to the petitioner and thus, he is seeking reference to arbitration. 8. The scheme of the contract is very clear. It provides for reference of the dispute in the first instance to the Adjudicator, to be appointed jointly by the Employer and the Contractor, who is supposed to adjudicate the matter within 28 days of the receipt of the dispute.
8. The scheme of the contract is very clear. It provides for reference of the dispute in the first instance to the Adjudicator, to be appointed jointly by the Employer and the Contractor, who is supposed to adjudicate the matter within 28 days of the receipt of the dispute. Clause 26 of the Conditions of the Contract further provides that in case the Adjudicator resigns or dies, or fails to fulfill his duties, a new Adjudicator will be jointly appointed by the Employer and the Contractor and in case of disagreement, the Adjudicator shall be designated by the Appointing Authority designated in the Contract Data. It is after the above procedure of getting the dispute adjudicated by the Adjudicator is over and the parties are not satisfied, they can demand reference of the matter to the Arbitrator, as provided under Clause 25 of the Conditions of the Contract. 9. In view of the aforesaid scheme as per the Conditions of the Contract, the appointment of an Arbitrator comes subsequently to the decision of the Adjudicator and that the Adjudicator has to be appointed jointly by the Employer and the Contractor and in the event of disagreement by the Appointing Authority designated in the Contract Data. In view of the above, the Adjudicator and the Arbitrator are two distinct foras for the resolution of dispute under the contract. The Arbitrator obviously has to be appointed in accordance with the provisions of the Act, but the Adjudicator has to be in terms of the Contract and not under the provisions of the Act. 10. In these circumstances, the Court fails to understand as to in what capacity the respondent-Contractor had moved before this Court by means of Arbitration Applications seeking appointment of an Adjudicator. In-fact, the Conditions of the Contract do not envisage intervention of the Court in the matter of appointment of an Adjudicator, that too through an Arbitration Application under the Act. Therefore, the very reference of the dispute to the Adjudicator by this Court by means of the order dated 03.05.2012 passed in S.B. Arbitration Application No.57/2011 and vide order dated 29.07.2016 passed in S.B. Misc. Arbitration Application No.19/2014, appears to have been passed under some misconception treating the matter to be that of one for appointment of an Arbitrator. 11.
Therefore, the very reference of the dispute to the Adjudicator by this Court by means of the order dated 03.05.2012 passed in S.B. Arbitration Application No.57/2011 and vide order dated 29.07.2016 passed in S.B. Misc. Arbitration Application No.19/2014, appears to have been passed under some misconception treating the matter to be that of one for appointment of an Arbitrator. 11. Notwithstanding the above, as the above orders are not in question and no doubt have been expressed in regard to the same, I need not dwell upon it any further and treating the said orders to be acceptable by the parties proceed further in the matter. 12. There is no dispute to the fact that the Adjudicator so appointed had decided the dispute vide order dated 06.04.2018 and the petitioner is not satisfied by the same. In such circumstances, the petitioner has rightly preferred the instant application for seeking reference to the arbitration in terms of Clause 25 of the Conditions of the Contract, which reads as under:- 25. Procedure for Disputes: 25.1 The Adjudicator shall give a decision in writing within 28 days of receipt of a notification of a dispute. 25.2 The adjudicator shall be paid daily at the rate specified in the Contract Data together with reimbursable expenses of the types specified in the Contract Data and the cost shall be divided equally between the Employer and the contractor, whatever decision is reached by the adjudicator. Either party may refer a decision of the Adjudicator to an Arbitrator within 28 days of the Adjudicator’s written decision. If neither party refers the dispute to arbitration within the above 28 days, the Adjudicator’s decision will be final and binding. 25.3 The arbitration shall be conducted in accordance with the arbitration procedure stated in the Special Conditions of Contract.” 13. On the simple reading of Clause 25.2 of the Conditions of the Contract, it is apparent that if the decision of the Adjudicator is not acceptable to either of the parties, they may refer the decision of the Adjudicator to an Arbitrator within 28 days. The petitioner undoubtedly invoked the above arbitral clause within the time provided and has promptly approached this Court, to which there is not dispute. Thus, in the overall facts and circumstances of the case, the petitioner is entitled to have the decision of the Adjudicator dated 06.04.2018 referred to the Arbitral Tribunal. 14.
The petitioner undoubtedly invoked the above arbitral clause within the time provided and has promptly approached this Court, to which there is not dispute. Thus, in the overall facts and circumstances of the case, the petitioner is entitled to have the decision of the Adjudicator dated 06.04.2018 referred to the Arbitral Tribunal. 14. It may not be out of context to mention that in the similar facts and circumstances, in a dispute of the respondent-Contractor with the Department of Water Resources, Government of Rajasthan, wherein also identical Conditions of the Contract existed, this Court vide judgment and order dated 27.07.2022 decided to refer the matter to the Sole Arbitrator. Thus, I have no hesitation to conclude that the matter deserves to be referred to the Sole Arbitrator. 15. It may also not be out of context to mention here that vide Clause 25.3(d) of the Special Conditions of the Contract, it has been provided that the arbitration proceedings shall be held at Kota and in the English language. Therefore, it is deemed just and fair to appoint a person based at Kota to be the Sole Arbitrator. 16. In view of the aforesaid facts and circumstances and looking to the amount of the claim, I appoint Mr. Jainendra Kumar Jain, District Judge (Retd.), R/o A-144, Riddhi Siddhi Nagar, Kunhari, Kota as the Sole Arbitrator, who shall proceed in the matter in accordance with the provisions of the Act to make the award within the time provided in the Act itself after charging the prescribed fee along with incidental expenses to be shared by the parties. 17. Registry is directed to intimate Mr. Jainendra Kumar Jain, District Judge (Retd.) of his appointment as the Sole Arbitrator. 18. The application stands disposed of accordingly.