Calcutta High Court
Niraj Kumar Bhora vs Union Of India & Ors on 1 September, 2009
Author: Indira Banerjee
Bench: Indira Banerjee
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ORDER SHEET Sheet No...
A.P. No. 336 of 2009
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL
SIDE
In the matter of:
NIRAJ KUMAR BHORA
Vs.
UNION OF INDIA & ORS.
BEFORE:
The Hon'ble Justice
INDIRA BANERJEE.
Date: 01.09.2009.
JUDGMENT
This application is for termination of the mandate of the presiding arbitrator appointed by the letter dated 21 st October, 2008, the presiding arbitrator appointed by the letter dated 25 th January, 2008 and the two co-arbitrators appointed by the letter dated 25th January, 2008 and other consequential reliefs.
By a tender notice No.51 of 2001-2002 dated 2 nd January, 2002 the respondent No. 2 invited tenders for earth work from Singur to Nalikul in connection with doubling of Seoraphuli-Nalikul section of the Seoraphuly-Tarakeswar line as fully described in the tender notice.
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Pursuant to the said tender notice, the petitioner submitted his tender. The tender submitted by the petitioner was accepted by the respondent No.2 by a letter No.CE/CON/WP/6540 dated 8 th January, 2003.
A formal agreement was executed on 3rd June, 2003 incorporating the General Conditions of Contract, 1969 as amended from time to time as part of the agreement. The relevant provisions of the said agreement are set out hereinbelow:
"1. That the contractor shall perform for the Railway Administration all the works as mentioned in the aforesaid tender for which the said tender has been accepted in manner as prescribed by and under and according to the following provisions, instructions, terms and conditions (all of which shall be read as a part of this agreement as if they had been reproduced herein fully) viz -
a) The provisions, instructions, terms and conditions as contained in the tender documents consisting of 140 pages which have been reproduced in the Annexure 'A' & 'B' hereto as modified and accepted in Annexure 'C' consisting of 2 pages.
b) The provisions, instructions, terms and conditions as contained in the Eastern Railway, Engineering Department-General conditions of contract and Standard Specifications, 1969 with upto date amendments referred as "the Standard Conditions & Specifications" a copy of which is hereby admitted and acknowledged by the contractor to be in his possession PROVIDED always that here any of the provisions, instructions, terms or conditions in the Standard Conditions and Specifications cannot be reconciled to or is repugnant to any of the provisions, instructions, terms or conditions in the tender documents, the later shall prevail."
The correspondence exchanged between the parties makes it absolutely clear that the General Conditions of Contract, 1969 as amended upto the date of execution of the agreement, was to govern the parties.
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By a letter dated 18th April, 2006 the respondent No.3 rescinded the contract. The relevant portion of the said letter is extracted hereinbelow for convenience:
"Since the period of 48 (Forty eight) hours notice has already expired, the above contract stands rescinded in terms of clause-62 of general conditions of contract, 1969 and the work under this contract will be carried out at your risk and cost."
Disputes, however, arose in connection with the said contract. The petitioner invoked the arbitration clause and sought appointment of an arbitrator. By a letter dated 21 st October, 2008 the respondent No.1 purported to appoint an arbitrator under the General Conditions of Contract, 2001.
The short question in this application is whether the General Conditions of Contract, 2001 is at all applicable to the contract between the parties. It is not in dispute that the agreement executed on 3 rd June, 2003 incorporated the General Conditions of Contract, 1969 as amended from time to time.
The entire correspondence between the parties referred to the General Conditions of Contract, 1969 as amended up to date. It is patently clear that the parties intended that the General Conditions of Contract, 1969 as amended from time to time would apply.
Mr. Das appearing on behalf of the respondents argued that the General Conditions of Contract, 2001 took effect from February, 2001, that is, over two years before execution 4 of the agreement in this case. The General Conditions of Contract, 2001 would thus govern the agreement.
It is true that the General Conditions of Contract, 2001 took effect from February, 2001, that is, before the execution of the contract between the petitioner and the respondents, as argued by Mr. Das.
It is, however, difficult to accept Mr. Das's submission that the General Conditions of Contract, 1969, as amended upto date, would mean the General Conditions of Contract, 2001, since the amendments upto date would include amendments up to 3rd June, 2003, being the date of execution of the agreement.
The General Conditions of Contract, 2001 superseded the General Conditions of Contract, 1969, as stated in the preface to the General Conditions of Contract, 2001. The reference in the agreement between the petitioner and the respondents, to the General Conditions of Contract, 1969, as amended upto the date of execution of the said agreement, was apparently not intended to apply to the General Conditions of Contract, 2001.
The General Conditions of Contract are not of statutory force, and the terms and conditions thereof do not automatically apply to all contracts. The terms and conditions of the General Conditions of Contract are made applicable by mutual agreement. Even though the General Conditions of Contract, 1969 might have been superseded by the General 5 Conditions of Contract, 2001, it was still open to the parties to agree to be governed by the terms and conditions of the General Conditions of Contract, 1969.
In the instant case, it was apparently the intention of the parties that the provisions of the General Conditions of Contract, 1969 should be incorporated as part of the agreement between the parties.
Accordingly, the respondents by a letter dated 3 rd November, 2004 being Annexure 'G' to the petition, accorded sanction to extension of the date of completion of the contract work upto 30 th June, 2005, under Clause 17(2) of the General Conditions of Contract, 1969, at the same rates, terms and conditions.
Mr. Malay Ghosh, appearing on behalf of the petitioner very rightly pointed out that Clause 17(2) existed in the General Conditions of Contract, 1969. There was no Clause 17(2) in the General Conditions of Contract, 2001. It is thus patently clear that it was never the intention of the parties that the General Conditions of Contract, 2001 should apply.
No Arbitral Tribunal could thus be appointed under the General Conditions of Contract, 2001. An Arbitral Tribunal appointed under the General Conditions of Contract, 2001, which, is not the contract governing the parties, is necessarily, de jure unable to perform his functions.
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Section 14 (1)(a) of the Arbitration and Conciliation Act, 1996 provides that the mandate of an arbitrator shall terminate if he becomes de jure or de facto, unable to perform his duties or for any other reason fails to act without undue delay.
Any controversy with regard to the existence of any of the grounds specified in Section 14(1)(a), that is, the inability either de jure or de facto of the arbitrator to perform his functions or his failure to act without undue delay would necessarily have to be adjudicated by the Court under Section 14(2). The instant application is thus maintainable.
However, the prayer of the petitioner for appointment of an arbitrator by the Chief Justice cannot be allowed. Section 15 of the Arbitration and Conciliation Act, 1996 provides that where the mandate of an arbitrator is terminated, a substitute arbitrator shall be appointed according to the Rules that were applicable to the appointment of the arbitrator being replaced.
The presiding arbitrator and co-arbitrators, whose mandate has been terminated, were not appointed pursuant to any application to the Chief Justice under Section 11 of the 1996 Act. The General Conditions of Contract, 1969 was applicable to appointment of the arbitrators. The substituted arbitrators are, therefore, to be appointed as per the General Conditions of Contract, 1969 and not by the Hon'ble the Chief Justice. 7
There will be an order in terms of prayer (a), (b), (c) and (d) of the application. The respondent No.1 is directed to appoint arbitrators expeditiously as per the provisions of General Conditions of Contract, 1969.
The application is allowed to the extent indicated above.
(Indira Banerjee, J.)