Punjab-Haryana High Court
Union Of India (Uoi) Through Chief ... vs Mr. Vijay Kumar Garg on 3 June, 1994
Equivalent citations: (1994)108PLR112
JUDGMENT Amarjeet Chaudhary, J.
1. This appeal has been filed by the Union of India against the order of the Subordinate Judge Ist Class, Jalandhar, appointing an independent Arbitrator for determining the disputes between the appellant and the Contractor.
2. Necessary facts for deciding the question in controversy are that an application was filed by the respondent in this appeal under Section 20 of the Arbitration Act (for short 'the Act') for appointment of Arbitrator by impleading the Union of India through its Secretary Railways, Railway Bhawan, New Delhi, Chief Engineer, Rail Coach Factory, Hussainpur (Kapurthala) and the General Manager, Railways, Near Railway Station, Jalandhar City as respondents. The respondent in this appeal would be referred to as the Contractor whereas the Union of India and its Officers who are appellants in this appeal would be referred to as the respondents. The Contractor filed the application with the averments that he was allotted the work of construction of 100 Beds Hospital in Rail Coach Factory, Hussainpur District Kapurthala by the Union of India-respondent No. 1 through its Chief Engineer, respondent NO.2, vide letter dated 4.8.1987. The work was to be completed within the time limit of 12 months only expiring on 3.8.1988. A regular contract agreement was executed and signed between the parties on 9.12.1987. The work could not be executed and completed within the original stipulated period due to repeated breach of contract on the part of the respondents, i.e. Union of India and its Officers. The Contractor was willing and competent to complete the said work within the stipulated period but on account of continuous breach of contract by the respondents, all programmes, policies and budgets of the Contractor were destroyed. According to him, some of the breaches of contract, have been detailed in paragraph 7 of the application which is reproduced below.
I. Non finalisation of foundation plan till as late as March 1988.
II. Super-structure details, structural details, finishing details, electrical and air-conditioning details which were partly cleared upto 30.3.1989 only.
III. Pendency of long awaited several other important decisions.
IV. Enormous delay in supplying of drawing, decisions, frequent changes and modifications therein.
V. The drawings as asked vide letter No. 597 dated 27.12.1988 and further correspondence by petitioner has still not been met with.
VI. Non-payment for work done, irregular and delayed payments.
VII. Non-decisions on non-scheduled items even till today.
3. It has further been averred that the Contractor cleared the position in his letter dated 305.89 but no attention was paid by the respondent The contractor highlighted the above-mentioned breaches in the afore-mentioned, letter. On the other hand, the contract was terminated illegally and wrongfully. It is further averred that extension demanded by the Contractor was necessitated by breaches of contract and the time was inadequate. It is further the case of the Contractor that he was surprised to know as to why the respondents issued 7 days notice dated 24.5.89 and 48 hours notice dated 1.6.89 terminating the contract in question despite the fact that extension was granted by the Union of India upto June 1989 vide its letter dated 12.4.1989. It has further been alleged in the application under Section 20 of Act that the respondents illegally and by force prevented him from lifting the materials, tools, plants, centring and shuttering, machinery and equipment lying at the site of the work, the details of which were submitted in the letter dated 3.6.1989. According to the Contractor, the respondents made the inventory of the materials belonging to him by unlocking the doors etc. and also recorded measurements unilaterally without affording an opportunity to him to present himself at that time. According to him he vide his letter dated 7th June, 1969 notified his Claims against the respondents which exceeded Rs. 1.5 crore. List of the articles and machinery etc. were duly submitted vide letter dated 3.6.89. It is alleged that the respondents vide letter dated 13.9.1989 have intimated the contractor that he will have to verify the inventory already made between 25th and 29th September failing which all material and equipments belonging to him would be sold in an open auction. It is further alleged that the aforesaid letter of the respondents was duly replied by the Contractor on 23.9.89. According to him in view of the afore-mentioned facts a dispute had arisen which was referable for adjudication by the Arbitrator.
4. All the averments made in the application were vehemently denied and the entire blame has been put upon the Contractor for the non-completion of the work. The perusal of the reply shows that the case was body contested. It has been averred that the Contractor has not approached the court with clean hands and that the court had no jurisdiction to try and entertain the petition. Yash Pal, it was stated, was no competent to file the petition. It was not disputed that the work was allotted to the Contractor. It was further stated that the progress of the work was very slow and that the conduct of the contractor showed that he was not willing to complete the contracted work within the stipulated period and even after the extension. It was denied that there was any breach on the part of the appellant Union of India.
5. During the pendency of the petition before the trial Court, the counsel for the appellant on 85.1990 admitted the execution of the agreement between the parties dated 9.12.1987. It was further admitted that the dispute had arisen between the parties. No evidence was, thus, led. The coatractor filed an application giving a panel of two names of Arbitrators i.e. Sh. Y.P. Gupta Retd. Superintending Engineer and Sh. R.N. Diwan Retd. Chief Engineer P.W.D. (B&R) Punjab but the respondents did not agree to either of the above-named Arbitrators and instead submitted that only the officers of the Railway Department could be appointed as Arbitrators.
6. The learned. Subordinate Judge after taking into consideration all the aspects of the matter, neither appointed any Arbitrator out of the two Arbitrators mentioned by the Contractor in his application nor appointed any Railway Officer to act as Arbitrator. On the other hand, he has chosen to appoint Sh. I.C. Gupta, former Engineer-in-Chief of PWD (B&R) Haryana by passing the impugned order on 25.5.1990. The Union of India has filed the present appeal before this Court.
7. I have heard the learned counsel for the parties, perused the pleadings of the parties, the documents placed on the file and the impugned judgment. Having given careful and deep thought to the entire matter, I am of the considered view that no case for interference is made out.
8. The primary question involved in this appeal is as to what is the interpretation of clause 64 of the Agreement executed between the parties which reads as under:- ' " Demand for Arbitration - (I) (i). In the event of any dispute or difference between the parties hereto as to the construction or operation of this contract, or the respective rights and liabilities of the parties on any matter in question, dispute or difference on any account, or as to withholding by the Railway of any certificate to which the contractor may claim to be entitled to, or if the Railway falls to make a decision within a reasonable time, then and in any such case, save the 'excepted matters' referred to in clause 63 of these conditions, the contractor, after 90 days but within 180 days of his presenting his final claim on disputed matters, shall demand in writing that the dispute or difference be referred to arbitration."
The Subordinate Judge after referring to paragraph 12 of the application and reply found that the letter dated 26.9.89 was received by the respondents in which . demand for appointment of Arbitrator was made. It has further been found by the Subordinate Judge, with reference to paragraph 18 of the application and the corresponding reply of the respondents, that it was recorded in the letter No. VKG/89 dated 7.6.89 that the Contractor submitted his claim against the respondents to the tune of Rs. 1.5 crore. It is further the finding of the Trial Court that in the letter dated 23.9.89 written by the Contractor, he has raised a demand for reference of the dispute between the parties to arbitration. According to the trial Court, the claim was submitted by the contractor on 7.6.89 raising the demand that the dispute be referred to arbitration and that since the period of 90 days had elapsed between 7.6.89 and 23.9.89, clause 64 of the agreement, as has been reproduced above, has been complied with, the trial Court did not find any merit in the argument of the counsel for the respondents that the Contractor was not supposed to present his claim to the Railways. It has been found that the Contractor was allotted the work by Chief Engineer on behalf of the Railways and, therefore, the claim was rightly made to him particularly when the Chief Engineer acted on behalf of the Railways for allotting the construction work. The trial Court has found that no panel of names of Arbitrators was sent by the respondents and that they did not agree to exercise their powers and, therefore, the court was justified under Sections 8 and 20 of the Arbitration Act to appoint the Arbitrator. The trial Court did not agree with the contention of the respondents that Railway Officers should be appointed as Arbitrators as there was disobedience of the order of the Court. However, while declining the request of the respondent to appoint the named Arbitrators in the agreement, the trial Court did not appoint any Arbitrator out of the panel of names given by the petitioner also. Shri I.C. Gupta, former Engineer-in-Chiet. PWD (B&R) has, been appointed as Arbitrator.
9. The interpretation put upon clause 64 of the Agreement appears to be correct. The said clause in my view, envisages that if any dispute or difference arises between the parties about the construction or operation of the contract or the respective rights and liabilities of the parties on any matter and the Railway fails to take a decision within reasonable time, the Contractor after 90 days but within 180 days of his presenting the final claim on the disputed matters can _ demand in writing that the dispute be referred to arbitration. In paragraph 17 of the application it is mentioned that the Contractor vide his letter date 23.9.1989 sought arbitration from the respondents, It has been admitted in paragraph 17 of the reply filed by the respondents that the letter was received on 27.9.1989 from the Contractor but no reply was submitted in response to the said letter. Paragraph 17 of the application and the reply are reproduced below:
Application " That the petitioners vide its letter No. VKG/89 1861 dated 23.9.89 have sought arbitration from the respondent as per arbitration clause of the contract. The photo-copy of the arbitration clause is appended herewith which may be considered as part and parcel of the case. The photo-copy of letter dt.23.9.89 seeking arbitration is also attached as part of this case as this contains the list of all disputes between parties which are to be referred o to arbitration.
Reply.
As regards para No. 17 of the petition, it has wrongly been stated that true and correct facts have not been mentioned. The true fact is that the letter was received on 27.9.1989 which has intentionally been dated 23.9.1989 which has intentionally been dated 23.9.1989 and the petitioner filed the present petition for reference even before the service of the letter, above-. stated, which was never declined by the Department. Rest of the para is wrong and hence denied."
In paragraph 13 of the application, it has been mentioned that the Contractor sent a letter dt. 7.6.89 and notified his claim. In reply to paragraph 13, receipt of the letter on 10.6.89 has been admitted. The contents of paragraph 13 of the application and the reply are also reproduced below:
Application " That the petitioner vide aforesaid letter No. VKG/89 dated 7th June 89 notified that the claims of petitioner against defendants exceed 1.5. crores. It was intimated earlier also an amount of Rs. 48 lakhs is due for the work done in both the works. Vide the letter dated 7th June 89 the respondents were requested to make due payments against work done losses and damages exceeding Rs. 1.5 crores, to withdraw illegal notices of termination, to return the materials T&P, machinery and equipment, centering and shuttering etc. belonging to petitioner retained by respondents at the site of the work. It was also intimated that the list of said article and machinery etc. have been duly submitted vide petitioner letter No. VKG/89/1778 dated 3.6.89.
Reply.
Para No. 13 of the petition has wrongly been stated. The letter was received by the respondents on 10th of June, 1989. The value of the machinery and material lying at the site of the work is much less than the losses suffered by the Union of India as a result of the failure of the petitioner in completing the work successfully and in time. Rest of the Para is wrong and hence denied. The figure of 1.5 crores as mentioned in the para reply is exaggerated, misleading and mala fide."
10. The perusal of the letter dated 7.6.89 reference to which has been made by the trial Court shows that the claim was submitted by the Contractor on the disputed matters. The Contractor after submitted the claim in the letter dated 7.6.89 was perfectly justified, in my considered view, to demand arbitration after the expiry of 90 days but within 180 days. The finding of the trial Court that the claim was rightly made to the Chief Engineer respondent No. 2 is also correct because admittedly the work was allotted to the Contractor by him on behalf of the Railways. Even otherwise, the Court should not go into such like technicalities.
11. The discretion of the trial Court not to appoint any Arbitrator from the Railway Department and from the panel of names given by the Contractor is also correct. It is clear from the record of the trial Court that a petition for contempt against the Railway Officers was filed and an application for appointment of Local Commissioner was also filed. In view of the serious differences having arisen, between the parties, the appointment of an independent Arbitrator, in my considered view, as has been made by the trial Court is quite correct. The Courts of law have always favoured the appointment of independent Arbitrators. The appointed arbitrator happens to be an Ex-Enginecr-in-Chief and, that too, not from the State of Punjab but from the Haryana State.
12. For the reasons recorded above, the appeal is found to be devoid of any merit and is consequently dismissed with no order as to costs.
13. Before parting with the judgment, it is necessary to note that the contractor acted in haste in filing application for appointment of an arbitrator on 23.9.1989 but I do not propose to dismiss the application on that count, particularly after the lapse of more than four year.