Patna High Court - Orders
M/S Vishal Builtech (India) Private ... vs The Union Of India & Ors on 15 July, 2013
Author: Navaniti Prasad Singh
Bench: Navaniti Prasad Singh
IN THE HIGH COURT OF JUDICATURE AT PATNA
Request Case No 6 of 2013
In
Civil Writ Jurisdiction Case No 14475 of 2012
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M/S Vishal Builtech (India) Private Limited having registered office at LG
1 & 2 Majestic Plaza, West Boring Canal Road, PO - S K Puri, District -
Patna through its Director
.... .... Petitioner/s
Versus
1 The Union of India through the General Manager, EC railway at & PO -
Hajipur, District - Vaishali
2 The General Manager, EC Railway Hajipur (Terminated Arbitrator)
3 The Chief Administrative Officer, (Con) EC railway at Mahendrughat,
Patna
4 The Deputy Chief Engineer (Con) At PO & District - Samastipur
.... .... Respondent/s
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Appearance :
For the Petitioner/s : M/s N K Singh & Jitendra Kr, Advocates
For the Respondent/s : Mr Ashok Kumar Keshari, Sr Advocate
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CORAM: HON'BLE MR JUSTICE NAVANITI PRASAD SINGH
ORAL ORDER
4 15-07-2013Heard Shri N K Singh, learned counsel for the petitioner and Shri A K Keshari, learned counsel for the Railways.
Shri Singh submits that a Court reference having been made and the arbitrator having failed to act, this Court, in this Request Case exercising jurisdiction under Section 11 read with Sections 14 and 15 of the Arbitration and Conciliation Act 1996, should appoint fresh set of arbitrators.
Shri Keshari, on the other hand, submits that this is not an arbitration at the instance of Court. It is an arbitration where parties have been relegated under Section 8.
Having examined the facts, in my view, Shri Keshari is correct.
Patna High Court REQ. CASE No.6 of 2013 (4) dt.15-07-20132
Petitioner and the Railways were under a written agreement bond. The contract aforesaid stipulated for certain work to be done. It further provided by clause 63 that in case the contractor raised any dispute or had any grievance, he had to, within specified time, approach the General Manager who, within specified time, had to decide all the issues. Clause 63 itself states that there are certain matters as specified therein which are not open to arbitration. This clause 63 itself, in my view, is an arbitration clause at the first instance. If we look further then Clause 64 is a contingency where Clause 63 is not fructified that is no award is rendered under Clause 63. In that event, if the matter is not decided in terms of Clause 63, the party is free to invoke Clause 64 where a panel of arbitrators are to be appointed. Thus, the contract contemplates a two tier arbitral forum.
It appears that in course of the execution of the said contract, there were disputes. Ultimately Railway cancelled the contract. Petitioner filed a writ petition before the Court challenging the order of the Railways cancelling the contract. Railways appeared and filed a counter affidavit pointing out to Clause 63. Considering the aforesaid, the Writ Court relegated petitioner to the arbitral proceedings in terms of Clause 63 of the contract directing the arbitrator (General Manager) to conclude the Patna High Court REQ. CASE No.6 of 2013 (4) dt.15-07-2013 3 proceedings within the time as provided in Clause 63. If we compare this entire fact with Section 8 of the Arbitration and Conciliation Act, 1996 then the answer is evident. It is not an arbitration at the instance of Court or upon a reference by Court but it is an arbitration to which a party is relegated in terms of Section 8 of the Act.
If that be so then firstly the question of Section 11 or 14 or 15, for that matter, would not apply at the moment. The reason is simple. Failure to comply with Clause 63 results in action in terms of Clause 64. Clause 63 itself contemplates that Clauses 63 and 64 are one scheme. Thus, as the petitioner alleges that the General Manager has not been able to decide the matter within the time stipulated in Clause 63, the consequence would be that petitioner has now to switch to Clause 64 seeking arbitration by an arbitral tribunal, as contemplated therein. Shri Keshari submits that Railways have already given four names as against three required in terms of Clause 64. It is now for the petitioner to act and exercise his right under Clause 64. In my view, Shri Keshari is correct. Clause 63 itself contains a default clause. It is not open to a party to accept a part of Clause 63 and reject another. Clause 63 has to operate as a whole and if that be so then Clause 64 follows as a matter of course so long as this scheme is held to Patna High Court REQ. CASE No.6 of 2013 (4) dt.15-07-2013 4 be valid. In the present case, the validity of the scheme is not under challenge.
Thus, it is for the petitioner to act in accordance with the rights conferred on him in terms of Clause 64 and not delay the proceedings any further.
Mr N K Singh, learned counsel for the petitioner very strongly contends that first where the agreement stipulated the General Manager to decide the matter within specified time. For no good reason, the General Manager refused to decide the issue, probably worried about his career as he was not in a position to take action against an employer of his interest. He then submits that if the scheme of Clause 64 is kept in mind what will happen is that the Railway is choosing from its own employees over which it exercises full disciplinary control two persons who are then said to be the arbitrators appointed by the petitioner, the contractor which is quite diabolical. These two arbitrators will then choose another railway officer or the GM would appoint another railway officer as a presiding arbitrator. The result would be though this arbitral tribunal consists of the presiding arbitrator and two others but they are all paid employees of the party in dispute from whom impartiality cannot be expected. In my view, till this date, no Court has declared such a clause to be Patna High Court REQ. CASE No.6 of 2013 (4) dt.15-07-2013 5 unreasonable, arbitrary or contrary to any Statute. In this jurisdiction, this Court cannot ignore this clause, however real petitioner's apprehension may be. It is expected that the Tribunal so constituted would act impartially so that confidence of the citizens is reassured.
In this connection, I may note that in this State, there were large number of disputes as between the contractors and the State Government in relation to Government contracts. Most of those contracts have various arbitration clause wherein a departmental arbitrator is nominated. Similar were the apprehensions. Ultimately, the State Government had set up an independent statutory tribunal known as Bihar Public Works Contracts Dispute Arbitral Tribunal Act, 2008 which Tribunal is presided by a retired High Court Judge. This increases public confidence.
Be that as it may, in the facts and circumstances of this case, it is now up to the petitioner to proceed in terms of Clause 64 of the agreement.
With this observation and direction, this Request Case stands disposed of.
M.E.H./- (Navaniti Prasad Singh)