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2023 DIGILAW 548 (ALL)

Prakash Art Studio v. Union of India

2023-02-23

J.J.MUNIR

body2023
JUDGMENT : 1. This is an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short, 'the Act of 1996') for appointment of an arbitrator. 2. The first applicant is a proprietorship firm and the second applicant is the proprietor of that firm. The opposite parties are the Union of India and the Ministry of Railways and various officials of the North Eastern Railway. 3. The applicant entered into a contract with the Senior Divisional Commercial Manager, North Eastern Railway, Izzat Nagar, Bareilly by a registered agreement dated 19.02.2016 for a period of three years w.e.f. 19.02.2016. The applicant's case is that under the contract he was authorized to exhibit hoardings and signboards on different areas at the railway station or other locations specified in enclosure 1 to the agreement. The details of those locations where hoardings could be displayed are setforth in paragraph no. 5 of the affidavit. The contract was awarded on a license fee of Rs.50,31,000/- for the entire period of three years. Should any dispute arise between parties, relating to the license governed by the contract, an arbitration clause is carried in clause 31.1, 31.2 and 31.3 which reads as under : "31.1 In the event of any dispute or differences between the parties as to the construction or interpretation of any of the terms and conditions of this agreement or to the application and as to the rights duties and obligations of the parties hereto (except the decision whereof is herein expressly provided for), the same shall together with counter-claim or set off be referred to the sole arbitration of the General Manager or a gazzetted officer of the Railway not below in the rank of administrative grade nominated by General Manager in that behalf and the decision of general manager or the person so appointed shall be final and binding on the parties hereto and shall be subject to provisions of Indian Arbitration and conciliation Act, 1996 and the rules there under and my statuary modification thereof. The sole arbitrator so appointed shall give award on all the matters referred for arbitration, indicating therein the breakup of sums awarded separately on each individual item of dispute. The sole arbitrator so appointed shall give award on all the matters referred for arbitration, indicating therein the breakup of sums awarded separately on each individual item of dispute. 31.2 If the arbitrator as appointed above refuses withdraws from his office as arbitrator or vacates his office or is to act as arbitrator, unable or unwilling to perform his functions as arbitrator for any reason whatsoever or dies or in the opinion of the General Manager fails to act without undue delay, the General manager shall appoint a new arbitrator in his place in the same manner in which the earlier arbitrator had been appointed. Such arbitrator may, at his discretion proceed with the reference from the stage at which it was left by the previous arbitrator. 31.3 While appointing the sole arbitrator as above, due care shall be taken that he is not the one who had an opportunity to deal with the matter to which the contract relates or who in the course of his duties as Railway Servant expressed his views on all or any of the under disputed or differences, the proceedings of the arbitral tribunal or the award made by such tribunal will however not be invalid merely for the reason that the arbitrator had, in the course of his service, opportunity to deal with the matters to which the contract relates or who in the course of his duties expressed view on all or any of the matter under disputes." 4. Now, a difference has arisen between parties on account of road widening and construction of a flyover, in addition to another facet of the dispute, that is, due to the Nagar Nigam claiming some land where hoardings were licensed to be put up as theirs. This led to a loss according to the applicant to the tune of Rs.32,45,385/-. The applicant, accordingly, invoked the arbitration clause and served a notice of arbitration under Section 11 of the Act of 1996 on 10.11.2021 calling upon the respondents to appoint an arbitrator. Since no arbitrator was appointed, this application under Section 11(6) of the Act of 1996 was made. 5. The applicant, accordingly, invoked the arbitration clause and served a notice of arbitration under Section 11 of the Act of 1996 on 10.11.2021 calling upon the respondents to appoint an arbitrator. Since no arbitrator was appointed, this application under Section 11(6) of the Act of 1996 was made. 5. It is the applicant's case that the respondent acting through the Senior Divisional Commercial Manager, North Eastern Railway, Izzat Nagar, Bareilly, issued a memo dated 17.11.2021, declining to appoint an arbitrator on the ground that the notice of arbitration was not served within two years after the date of expiry of the contract. In this regard the respondents placed reliance on clause 31.4 of the agreement which reads as under : "31.4 The cognizance to the demand for the arbitration to either of the parties will be given only if the arbitration notice is served within the 02 (two) years time after the date of expiry of the contract" 6. Accordingly, the applicant has moved this Court invoking our jurisdiction under Section 11(6) of the Act. The respondents have filed a counter affidavit and Mr. Krishnajee Shukla, learned Central Government Counsel has opposed the prayer for appointment of an arbitrator on the ground of limitation carried in clause 31.4. Mr. Manu Saxena, learned Advocate on the other hand has relied upon the orders of the Supreme Court dated 10.01.2022 passed in suo motu writ petition (c) No. 3 of 2020, In Re: Cognizance for Extension of Limitation. 7. The directions in the said order had been issued extending limitation in the face of the unprecedented CoVid-19 pandemic. These directions read as under : "5. Taking into consideration the arguments advanced by learned counsel and the impact of the surge of the virus on public health and adversities faced by litigants in the prevailing conditions, we deem it appropriate to dispose of the M.A. No. 21 of 2022 with the following directions: I. The order dated 23.03.2020 is restored and in continuation of the subsequent orders dated 08.03.2021, 27.04.2021 and 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. II. Consequently, the balance period of limitation remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022. III. II. Consequently, the balance period of limitation remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022. III. In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply. IV. It is further clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings. 6. As prayed for by learned Senior Counsel, M.A. No. 29 of 2022 is dismissed as withdrawn." 8. In this case since, the time period of two years for invocation of the arbitration clause from the expiry of the period of contract came to an end between 15.03.2020 and 28.02.2022, the period of limitation would be deemed to be extended, at least up to 28.02.2022 and ninety days further. Here the notice was served on 10.11.2021 which falls within the period from 15.03.2020 to 28.02.2022. 9. Accordingly, in the opinion of this Court, the limitation contemplated in the arbitration clause would be of no assistance to the respondents. Since there is an arbitrable dispute that has arisen between parties covered by the arbitration clause, where the respondents have refused to refer the matter to arbitration, in the opinion of this Court, it is a fit case for appointment of an arbitrator. 10. Both parties agree that Hon'ble Mr. Justice Shishir Kumar, former Judge of this Court, resident of Flat No. 24, Anapurna Vihar, 3-D, Beli Road, Allahabad (U.P), Mobile No. 9415235116 be appointed as the Arbitrator, subject to His Lordship's consent, in terms of the provisions contained in Section 11(8) read with Section 12(1) of the Act of 1996, by sending a letter of request to His Lordship. 11. The matter is referred to the Arbitrator for resolution of the dispute between parties. 11. The matter is referred to the Arbitrator for resolution of the dispute between parties. The Arbitrator shall be paid fees as per the schedule attached to the Act of 1996. 12. The application, accordingly, stands allowed. 13. In case the Arbitrator recuses, the matter shall be listed before the Court for further orders.