Bombay High Court
Naginbhai C. Patel vs Union Of India on 23 December, 1998
Equivalent citations: 1999(2)BOMCR189, 1999(1)MHLJ745
ORDER Dr. B.P. Saraf, J.
1. This is an application under sub-section (6) of section 11 of the Arbitration and Conciliation Act, 1996 ("Act") for appointment of an arbitrator to decide the disputes and differences between the parties arising out of contract dated 16th June, 1997 for construction of Drawing Hall Electrical Lab for Technical High School at Diu. The arbitration agreement is contained in Clause 25 of the contract which, reads as follows :
"Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions hereinbefore 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 completion of abandonment thereof shall be referred to the sole arbitration of the person appointed by the Secretary, P.W.D. in charge of the work at the time of dispute or if there be no Secretary, the administrative head of the said P.W.D. at the time of such appointment. It will be no objection to any such appointment that the arbitrator so appointed is a Government servant, that he had to deal with the matters to which the contract relates and that in the course of his duties as Government servant he had expressed views on all or any of the matters in dispute or difference. The arbitration to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason, such Chief Engineer or administrative head as aforesaid at the time of such transfer vacation of office or inability to act, shall appoint another person to act as arbitrator in accordance with the terms of the contract. Such persons shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is also a term of this contract that no person other than a person appointed by such Secretary or administrative head of the P.W.D. as aforesaid should act as arbitrator and if for any reason, that's not possible, the matter is not be referred to arbitration at all. In all cases where the amount of the claim in dispute is Rs. 75,000/- (Seventy-five thousand) and above, the arbitrator shall give reasons for the award.
Subject as aforesaid, the provisions of the Arbitration Act. 1940, or any statutory modification or re-enactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceeding under this clause.
It is a term of the contract that the party invoking arbitration shall specify the dispute or disputes to be referred to arbitration under this clause together with the amount or amount claimed in respect of each such dispute.
It is also a term of the contract that if the contractor (s) do/does not make any demand for arbitration in respect of any claim (s) in writing within 90 days of receiving the intimation from the Govt. that the bill is ready for payment, the claim of the contractor (s) will be deemed to have been waived and absolutely barred and the Govt. shall be discharged and released of all liabilities under the contract in respect of these claims.
The arbitrator (s) may from time to time with consent of the parties enlarge the time, for making and publishing the award.
The decision of the Superintending Engineer regarding the quantum of reduction as well as justification thereof in respect of rates for sub-standard work which may, be decided to be accepted will be final and would not be open to arbitration."
Disputes and differences having arisen out of the contract, the petitioner, by his letter dated 20th July, 1998 (Ex. 'C' to the application) made a demand for arbitration in respect of the claims set out in Annexure "A" thereto and requested the Secretary, Public Works Department of the Union territory of Daman and Diu to appoint a sole arbitrator in terms of Clause 25 of the contract to adjudicate the disputes. The Secretary, Public Works Department having failed to appoint an arbitrator pursuant to the above demand in terms of arbitration agreement, the petitioners approached the Chief Justice of this Court under sub-section (6) of section 11 of the Act with a request to appoint a sole arbitrator to decide the disputes and differences arising out of the above contract.
2. I have heard Miss L. Munim, learned Counsel for the petitioner and perused the facts of the case. I have also heard Mr. A.V. Mohta, learned Counsel for the respondents. There is no dispute about the existence of the arbitration agreement, arising of disputes between the parties in regard to the claims of the petitioner, demand for arbitration by the petitioner on 20th July, 1998 and receipt of the same by the respondents on the very same day. Admittedly, no arbitrator was appointed by the appointing authority till the making of request by the petitioner to the Chief Justice under sub-section (6) of section 11 of the Act on 21st August, 1998 to appoint an arbitrator. Despite that, the respondents oppose the appointment of arbitrator by the Chief Justice or the person designated by him on two grounds. First, an arbitrator has been appointed by the appointing authority during the pendency of this applications on 29th September 1998. That being so, this application has become infructuous. Second, on the failure of the authority to appoint an arbitrator under the procedure set out in the arbitration agreement, the Chief Justice or the person designated by him cannot appoint the arbitrator itself. It can only direct the appointing authority to act under the procedure and to appoint an arbitrator. So far as the second ground is concerned, it has been held by the Chief Justice M.S. Shah of this Court (as His Lordship then was) in B.T. Patil & Sons v. Konkan Railway Corpn., and by me in Arbitration Petition No. 161 of 1998 Larsen & Toubro Limited v. Konkan Railway Corpn., in judgment dated 23rd December, 1998 , that the Chief Justice or any person designated by him has to make the appointment himself. It has been categorically held that the expression "to take the necessary measures" in sub-section (6) of section 11 intended to mean that the Chief Justice or the person designated by him should make the appointment himself having regard for considerations likely to secure an independent and impartial arbitrator and not merely order the recalcitrant party or appointing authority to act. The second ground of opposition to appointment of arbitrator in this case is thus squarely covered by the above decisions against the respondents.
3. So far as the first ground is concerned, the submission of Mr. Mohta, learned Counsel for the respondents is that there being no time limit in the arbitration agreement for appointment of an arbitrator, the filing of the application under sub-section (6) of section 11 of the Act after the expiry of thirty days cannot preclude the respondents from appointing an arbitrator in terms of the arbitration clause even after the filing of the application. Miss Munim, learned Counsel for the petitioner, on the other hand, submits that the appointment after the filing of the application is no appointment in the eye of law. According to her, after filing of this application, the respondents cannot appoint the arbitrator. It can be done only by the Chief Justice or a person designated by him.
4. I have carefully considered the rival submissions. In the instant case, the petitioner waited for 30 days from the date of demand for appointment of arbitrator and having failed to get response from the appointing authority within that period, approached the Chief Justice of this Court for appointment of arbitrator under sub-section (6) of section 11 of the Act. I do not find any infirmity in this action of the petitioner. The petitioner waited for 30 days from the receipt of request from the petitioner and on the failure of the appointing authority to appoint an arbitrator within such time, approached the Chief Justice under sub-section (6) of section 11 of the Act with a request to appoint the arbitrator. The absence of time limit in sub-section (6) of section 11 does not mean that the aggrieved party cannot request the Chief Justice or the person designated by him to take the necessary measure if no appointment is made by the appointing authority within a reasonable time. What is reasonable length of time will depend upon the circumstances of each case. If the appointment is not made within a reasonable length of time, the Chief Justice or the person designated by him may himself make the appointment. Ordinarily, 30 days should be reasonable length of time. Admittedly, this petition has been filed after lapse of 30 days from the receipt of demand by the respondents. That being so, no objection can be taken by the respondents to the filing of the present application. The purported appointment made by the appointing authority during the pendency of this application is no appointment in the eye of law. It is non est. In view of the facts and circumstances set out above, in the instant case, it is for the Chief Justice or the person designated by him to make the appointment having due regard for considerations likely to secure the appointment of an independent and impartial arbitrator.
5. I, therefore, proceed to appoint the arbitrator in exercise of powers under sub-section (6) of section 11 of the Act. Having regard to the nature of the dispute, I am of the opinion that a technical person will be a fit person to act as a sole arbitrator. The respondents have furnished a list of 10 persons, any one of them, in their opinion, can be appointed as arbitrator to decide the disputes and differences arising in this case. In that list, one of the person is Mr. M.C. Desai, retired Chief Engineer of the Gujarat State. Miss Munim, learned Counsel for the petitioners, has also no objection to the appointment of Mr. M.C. Desai as the sole arbitrator.
6. Accordingly, Mr. M.C. Desai, retired Chief Engineer, B-14, River Drive Society, Adajan Road, Surat-395 009 is appointed as the sole arbitrator to decide the disputes and differences between the parties in this case.
7. This arbitration petition stands disposed of accordingly.
8. The Prothonotary and Senior Master to communicate this order to the learned arbitrator.
9. Order accordingly.