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Rajasthan High Court · body

2025 DIGILAW 368 (RAJ)

Rakesh Enterprises, Jaipur, through Its Authorised Partner Sh. Rishabh Jain v. Union of India

2025-02-14

SUDESH BANSAL

body2025
Order : SUDESH BANSAL, J. 1. Instant civil arbitration application has been filed by applicant under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (for short "the A&C Act, 1996"), seeking appointment of a sole Arbitrator to resolve the dispute arisen between the parties under the Contract No.15/EE (E)/JCED/2020-21 for "SITC of 13 passengers (884 kg) capsulated lift at Academic Block, NIA, Jaipur". 2. Reply to the arbitration application in form of counter affidavit, by and on behalf of respondent, has been filed. 3. Heard learned counsel for both the parties and perused the documents available on record. 4. Petitioner has come up with a case that the contract in respect of SITC for 13 Passengers (884 Kg) Capsulated Lift at Academic block, NIA Jaipur vide order dated 01.01.2021, was awarded in favour of applicant and pursuant thereof, the applicant undertook preparation to complete the contract but on account of not specifying the site by respondent, the work could not be initiated. Later on, the respondent vide letter dated 31.07.2021 (Ann.4) was issued a letter for foreclosure of the contract which has caused loss of profit/earnings to the applicant as also applicant suffered damages. 5. Applicant has referred Clause 25 of the General Conditions of Contract-2020 (for short "GCC-2020), to refer the dispute for resolution to the Arbitration Tribunal of sole Arbitrator stating inter alia that in terms of such clause, request was made by the applicant to the Chief Engineer to refer the dispute to the Dispute Redressal Committee (DRC) vide letter dated 28.01.2024 but the dispute was not referred to DRC within the stipulated period of 15 days, hence the applicant issued a legal notice dated 24.02.2024 pressing for appointment of an Arbitrator. On account of non- appointment of Arbitrator by mutual consent, the instant arbitration application has been filed on 18.04.2024. 6. In reply to the arbitration application, respondent has not questioned the issuance of contract work, in favour of applicant vide letter dated 01.01.2021, so also foreclosure of such contract vide letter dated 31.07.2021, however, the arbitration application has been resisted on the ground of non-adherence to the procedure for appointment of Arbitrator, envisaged under Clause 25 of the GCC-2020. The respondent has also raised an objection of limitation that the prayer for arbitration has been made belated. 7. The respondent has also raised an objection of limitation that the prayer for arbitration has been made belated. 7. In addition, it has been pointed out that the dispute has been referred to the DRC but in rebuttal, counsel for the applicant submits that for making reference of dispute to the DRC, belated consent of the applicant was sought but since the stipulated period of 15 days had passed, the applicant never extended his consent and has invoked the arbitration clause prior thereto vide notice dated 24.02.2024. 8. Having considered the rival contentions of learned counsel for both parties and after going through the respective pleadings and material on record, this Court finds that the dispute arose between the parties on issuance of letter dated 31.07.2021, by the respondent for foreclosure of the contract awarded in favour of the applicant vide letter dated 01.01.2021. Applicant has raised a claim for awarding compensation and damages through letter dated 28.01.2024, it means within a period of three years from the date of accrual of cause of action. It appears that the dispute was not referred by the Chief Engineer to the DRC within stipulated period of 15 days from receipt of letter dated 28.01.2024, as envisaged in Clause 25 (i) of the GCC-2020, the applicant invoked arbitration clause of Section 25 (ii) of GCC-2020 vide legal notice dated 24.02.2024 to send the dispute before the sole Arbitrator for resolution. The clause 25 of GCC-2020 reads as under:- " Clause 25 Except where otherwise provided in the contract, all questions and disputes relating to the meaning of the specifications, design, drawings and instructions here-in before mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions, orders or these conditions or otherwise concerning the works or the execution or failure to execute the same whether arising during the progress of the work or after the cancellation, termination, completion or abandonment thereof shall be dealt with as mentioned hereinafter: (i) If the contractor considers any work demanded of him to be outside the requirements of the contract, or disputes any drawings, record or decision given in writing by the Engineer-in-Charge or if the Engineer in Charge considers any act or decision of the contractor on any matter in connection with or arising out of the contract or carrying out of the work, to be unacceptable and is disputed, such party shall promptly within 15 days of the arising of the disputes request the Chief Engineer/ CPM, or where there is no Chief Engineer/CPM, the Additional Director General/Special Director General (CE/ADG/SDG) who shall refer the disputes to Dispute Reressal Committee (DRC) within 15 days along with a list of disputes with amounts claimed if any in respect of each such dispute. The Dispute Redressal Committee (DRC) give its decision within a period of 60 days extendable by 30 days by consent of both the parties from the receipt of reference from CE/CPM/ADG/SDG. The constitution of Dispute Redressal Committee (DRC) shall be as indicated in Schedule 'F'. Provided that no party shall be represented before the Dispute Redressal Committee by an advocate/legal counsel etc. The DRC will submit its decision to the concerned ADG/SDG for acceptance. The constitution of Dispute Redressal Committee (DRC) shall be as indicated in Schedule 'F'. Provided that no party shall be represented before the Dispute Redressal Committee by an advocate/legal counsel etc. The DRC will submit its decision to the concerned ADG/SDG for acceptance. ADG/SDG in a time limit of 30 days from receipt of DRC decision will convey acceptance or otherwise on the said decision if the Dispute Redressal Committee (DRC) fails to give its decision within the aforesaid period or the ADG/SDG fails to give his acceptance in the aforesaid time limit or any party is dissatisfied with the decision of Dispute Redressal Committee (DRC) ADG/SDG theneither party may within a period of 30 days from the receipt of the decision of Dispute Redressal Committee (DRC), ADG/SDG or on expiry of aforesaid the time limits available to DRC/ADG/SDG may give notice to the Chief Engineer/CPM, CPWD, in charge of the work or if there be no Chief Engineer/ CPM, the Additional Director General/Special Director General of the concerned region of CPWD or if there be no Additional Director General/ Special Director General, the Director General, CPWD for appointment of arbitrator on prescribed proforma as per Appendix XVII under intimation to the other party. It is a term of contract that each party invoking arbitration must exhaust the aforesaid mechanism of settlement of claims/disputes prior to invcking arbitration. The CE/CPM/ADG/SDG shall in such case appoint the sole arbitrator or one of the three arbitrators as the case may be within 30 days of receipt of such a request and refer such disputes to arbitration. Wherever the Arbitral Tribunal consists of three Arbitrators, the contractor shall appoint one arbitrator within 30 days of making request for arbitration or of receipt of request by Engineer-in-charge to CE/ADG/SDG /DG for appointment of arbitrator, as the case may be, and two appointed arbitrators shall appoint the third arbitrator who shall act as the Presiding Arbitrator. In the event of (a) A party fails to appoint the second Arbitrator, or (b) The two appointed Arbitrators fail to appoint the Presiding Arbitrator, then the Director General, CPWD shall appoint the second or Presiding Arbitrator as the case may be. (ii) Disputes or difference shall be referred for adjudication through arbitration by a Tribunal having sole arbitrator where claimed amount is Rs. 20 Crore or less. Where claimed Value is more than Rs. (ii) Disputes or difference shall be referred for adjudication through arbitration by a Tribunal having sole arbitrator where claimed amount is Rs. 20 Crore or less. Where claimed Value is more than Rs. 20 Crore, Tribunal shall consist of three Arbitrators as above. The requirements of the Arbitration and Conciliation Act, 1996 (26 of 1996) and any further statutory modification or re-enactment thereof and the rules made there under and for the time being in force shall be applicable. It is a term of this contract that the party invoking arbitration shall give a list of disputes with amounts claimed, if any, in respect of each such dispute along with the notice for appointment of arbitrator and giving reference to the decision of the ADG/ SDG on the finding/recommendation of DRC. It is also a term of this contract that member(s) of the Arbitration Tribunal shall be a Graduate Engineer with experience in handling public works engineering contracts, and further he shall have earlier worked at a level not lower than Chief Engineer/ equivalent (i.e. Joint Secretary level of Government of India). This shall be treated as a mandatory qualification to be appointed as arbitrator. Parties, before or at the time of appointment of Arbitral Tribunal may agree in writing for fast track arbitration as per the Arbitration and Conciliation Act, 1996 (26 of 1996) as amended in 2015. Subject to provision in the Arbitration and Conciliation Act, 1996 (26 of 1996) as amended in 2015 whereby the counter claims if any can be directly filed before the arbitrator without any requirement of reference by the appointing authority. The arbitrator shall adjudicate on only such disputes as are referred to him by the appointing authority and give separate award against each dispute and claim referred to him and in all cases where the total amount of the claims by any party exceeds Rs. 1,00,000/-, the arbitrator shall give reasons for the award. It is also a term of the contract that fees payable to arbitral tribunal shall be as approved by DG, CPWD, OM issued vide no.2/2006/SE(TLC)/CSQ/137 dated 19-11-2019 (or its latest amendment as approved by DG, CPWD). This fee shall be shared equally by parties. The place of arbitration shall be as mentioned in Schedule F. In case there is no mention of place of arbitration, the arbitral tribunal shall determine the place of arbitration. This fee shall be shared equally by parties. The place of arbitration shall be as mentioned in Schedule F. In case there is no mention of place of arbitration, the arbitral tribunal shall determine the place of arbitration. The venue of the arbitration shall be such place as may be fixed by the Arbitral Tribunal in consultation with both the parties. Failing any such agreement, then the Arbitral Tribunal shall decide the venue." 9. This Court finds that the applicant has followed the procedure for appointment of Arbitrator as envisaged under Clause 25 referred hereinabove. This Court finds that reference of dispute by the Chief Engineer to the DRC is neither mandatory nor the period during which the proceedings would remain pending before the DRC are excludable from counting the limitation, yet the fact is, even prayer was made by applicant but the Chief Engineer could not refer the dispute to the DRC within 15 days from the letter dated 28.01.2024 issued by the applicant. Hence, in such eventuality Clause 25(ii) comes in effect and operation, for sending the dispute to Arbitrator. 10. The High Court, being a referral Court while dealing with the application for appointment of Arbitrator, exercises its jurisdiction within a narrow compass in the light of provision of Section 11(6A) of the A&C Act, 1996, which reads as under:- “(6A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.” The scope of examination under Section 11(6A) of the A&C Act, 1996, is confined to existence of arbitration agreement in terms of Section 7 of the A&C Act, 1996. 11. The provision of Section 11(6A) of the A&C Act, 1996, is alive and operative as settled by the Constitutional Bench of Hon'ble Supreme Court In Re: Interplay Between Arbitration Agreements Under The Arbitration and Conciliation Act 1996 And the Indian Stamp Act, 1989 [ AIR 2024 SC 1 ] and further, Hon'ble Supreme Court in case of SBI General Insurance Co. Ltd. Vs. Krish Spinning: Civil Appeal No.7821/2024 , has made it clear that the scope of enquiry at the stage of appointment of arbitrator is limited to a prima facie scrutiny of the existence of arbitration agreement and nothing-else. Ltd. Vs. Krish Spinning: Civil Appeal No.7821/2024 , has made it clear that the scope of enquiry at the stage of appointment of arbitrator is limited to a prima facie scrutiny of the existence of arbitration agreement and nothing-else. 12. Request has been made that as per the updated list dated 13.04.2023, prepared by the respondent for empanelment of Arbitrator in CPWD, any Arbitrator enlisted therein may be appointed. The copy of updated list dated 13.04.2023 has been placed on record. 13. In view of above discussion, the instant arbitration application succeeds and is hereby allowed. This Court selects the name of empanelled Arbitrator Mr. Mahesh Kumar Gupta, Address:- Plot No.155,Lane 5, Guru Jambeshwar Nagar-A, Gandhi Path, Vaishali Nagar, Jaipur; Mobile No.7525835777; E-mail:- mkg239@gmail.com, to act as an Arbitrator, to adjudicate the dispute between parties in accordance with provisions of the Arbitration and Conciliation Act, 1996 and on his name, counsel for parties have no objection. 14. The appointment of the Sole Arbitrator is subject to the declarations being made under Section 12 of the Arbitration & Conciliation Act, 1996 with respect to independence and impartiality, and the ability to devote sufficient time to complete the arbitration within the prescribed period. 15. The arbitration fee of the Sole Arbitrator shall be payable in accordance with the provisions contained in the Manual of Procedure for Alternative Dispute Resolution, 2009 as amended by the Manual of Procedure for Alternative Dispute Resolution (Amendment), 2017 vide notification dated 23.03.2017 read with 4 th Schedule appended to the Act of 1996 or as determined by the Arbitrator with consensus of parties. 16. The Registry is directed to intimate Arbitrator Mr. Mahesh Kumar Gupta (Empanelled Arbitrator of CPWD), for his approval and consent to act as Arbitrator. 17. All other issues may be raised by the parties before the Arbitrator, which shall be considered in accordance with law. 18. 16. The Registry is directed to intimate Arbitrator Mr. Mahesh Kumar Gupta (Empanelled Arbitrator of CPWD), for his approval and consent to act as Arbitrator. 17. All other issues may be raised by the parties before the Arbitrator, which shall be considered in accordance with law. 18. Since as per Section 29A of the Arbitration and Conciliation Act, 1996, the arbitration proceedings are required to be concluded within scheduled time as stipulated therein, it is expected from the parties to appear before the Arbitrator on 05.03.2025 or any other date as informed by the Arbitrator to parties or agreed between parties with the consent of Arbitrator, and further parties shall provide their respective E-mail/ Contact Number/ Mobile Number as also of their authorized representatives/lawyers, appearing on their behalf before the Arbitration Tribunal, in order to facilitate the Arbitrator to send information to the parties, whenever required. The information sent by the Arbitrator, on such address/ E-mail/ cellphone of the parties/ their authorized representatives/lawyers, shall be treated as sufficient unless same is not changed. 19. The Arbitration Application stands disposed of accordingly.