Himachal Pradesh High Court
M/S Ajay Kumar Sood vs State Of Himachal Pradesh & Another on 9 December, 2022
Author: A.A. Sayed
Bench: A.A. Sayed
IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA
Arbitration Case No. 137 of 2022
Decided on 9th December, 2022
.
____________________________________________________
M/s Ajay Kumar Sood ....Petitioner.
Versus
State of Himachal Pradesh & another ...Respondents.
Coram
The Hon'ble Mr. Justice A.A. Sayed, Chief Justice
1
Whether approved for reporting?
____________________________________________________
For the petitioner: Mr. Suneet Goel, Advocate.
For the respondents: Mr. Yudhvir Singh Thakur, Deputy
Advocate General.
A.A. Sayed, Chief Justice (oral)
The petitioner, who is a Class-A Contractor with the Public Works Department-respondents has filed this petition invoking Sections 14 and 15 of the Arbitration and Conciliation Act, 1996 ('the Act' for short) for terminating the mandate of Superintending Engineer (Arbitration Circle), HPPWD, Solan as Arbitrator and for appointment of a substitute Arbitrator.
2. Pursuant to a tender issued by the respondents, the petitioner was awarded the work of lowering and widening of existing tunnel near Auckland School, Shimla. An Agreement was 1 Whether reporters of Local Papers may be allowed to see the judgment?
::: Downloaded on - 15/12/2022 20:31:06 :::CIS -2-executed between the parties.
3. In view of the arbitration clause in the Agreement, the .
petitioner invoked arbitration and the Chief Engineer (SZ) HPPWD, Shimla appointed the Superintending Engineer, Arbitration Circle, HPPWD, Solan as a sole Arbitrator vide letter dated 14.08.2015. The learned Arbitrator entered upon the reference on 27.08.2015 and the first hearing was held on 18.12.2015. Thereafter, the second hearing was held on 17.03.2016 and the matter was adjourned to 30.06.2016. The third hearing was held on 01.12.2016, when the matter was directed by the Superintending Engineer, Arbitration Circle, HPPWD, Solan to be pursued for amicable settlement and the case was referred to Superintending Engineer, 4th Circle, HPPWD, Shimla, for amicable settlement.
4. It is the case of the petitioner that there was no question of delegating powers by the learned Arbitrator to the Superintending Engineer for the purpose of amicable settlement and the learned Arbitrator himself could have undertaken the process of amicable settlement. On 20.04.2017, the Superintending Engineer, 4th Circle, HPPWD held that the amicable settlement was not feasible and referred the matter ::: Downloaded on - 15/12/2022 20:31:06 :::CIS -3- back to the learned Arbitrator. In the hearing held on 12.10.2017, the respondents filed their statement of defence and other .
documents, including the final bill. It is contended that thereafter several proceedings were held on various dates viz. 28.12.2017, 14.03.2018, 12.07.2018, 18.09.2018, 12.11.2018 and 28.06.2019.
It is further contended that during the course of 12th hearing held on 28.06.2019, the learned Arbitrator again referred the matter to Superintending Engineer, 4th Circle, HPPWD, Shimla, for amicable settlement. The petitioner was left with no option but to agree to go for an amicable settlement. After several dates and failure of the amicable settlement on 17.04.2022, the matter has not been taken up by the learned Arbitrator since there is no regular incumbent posted as Superintending Engineer, Arbitration Circle, HPPWD, Solan. It is contended that the amicable settlement has already failed twice. The learned counsel for the petitioner has pointed out that the learned Arbitrator was appointed on 14.08.2015 and till date except for conducting non-
effective hearings or referring the matter to amicable settlement repeatedly, there is no progress in the arbitration proceedings.
5. In the affidavit-in-reply filed by the respondents in paragraphs 6 to 12, it is stated as follows:-
::: Downloaded on - 15/12/2022 20:31:06 :::CIS -4-" 6. That the contents of Para 6 of the petition are not correct, hence denied. It is submitted that during the course of 12 hearing held on 28.06.2019, the counsel of the .
claimant contractor requested the arbitrator and made a offer for the amicable settlement for the case as per final bill of the work which was settled and payment was released to the claimant contractor (Annexure R-4). It is denied that the Ld. Arbitrator yet again submit the matter for amicable settlement and adopted procedure unknown in law. The petitioner has concealed true facts while filing the petition (Annexure R-5).
7. That the contents of this Para are not correct hence denied. It is submitted that the amicable settlement could not be finalized due to non submission of documentary proof justifications with the revised claims submitted by the claimant contractor for amicable settlement. Hence settlement was not feasible and matter was again referred back to the Ld. Arbitrator.
8. That the contents of Para 8 of the petition are wrong hence denied. It is submitted that the matter was delayed due to no-submission of documentary proof justifications with the revised claims by the claimant contractor.
Due to fault on the part of the claimant / contractor the settlement failed twice. It is specifically submitted that the matter was referred by the Ld. Arbitrator for amicable settlement on the request of the claimant contractor and his counsel.
9. That the context of Para 9 of the petition are wrong, hence denied. It is submitted that regular hearings were conducted by the Ld. Arbitrator, but claimant contractor failed to provide the documentary proof/justification, only due to that reason the matter was delayed. There was no un- necessary delay on the part of the Ld. Arbitrator.
::: Downloaded on - 15/12/2022 20:31:06 :::CIS -5-10. That the contents of Para 10 of the petition are not correct hence denied, as already submitted that the claimant/ contractor has failed ODAY to provide supporting .
documents in respect of his claims therefore the settlement could not be finalized. It is denied that the petitioner has been un-necessarily harassed on this account.
11. That the contents of Para 11 of the petition are not correct and denied in view of the submission made in preceding Paras.
12. That the contents of Para 12 of the petition as alleged are not correct, so denied. It is submitted that presently there is no permanent arbitrator posted in the office of the Arbitration Circle, HPPWD, Solan because and charge has been given to the Superintending Engineer, 3rd Circle, HPPWD, Solan, and regular hearings are being conducted in the cases. However, the claimant/contractor himself not attending the hearings regularly and has not shown any interest in progress of the proceedings."
6. The learned Deputy Advocate General has pointed out that several hearings have taken place and the last hearing was held on 28.09.2022. With the affidavit-in-reply, zimni orders of the proceedings are also annexed. A perusal of the same shows that no effective hearing has taken place.
7. The learned counsel for the petitioner has pointed out that there is no regular incumbent posted as Superintending Engineer, Arbitration Circle, HPPWD, Solan, which has severely ::: Downloaded on - 15/12/2022 20:31:06 :::CIS -6- affected the adjudication of the disputes. He further submitted that there are as many as 180 cases pending before the learned .
Arbitrator and no case has been disposed of by him.
8. The learned counsel for the petitioner has invited attention of the Court to Section 14 of the Act, which reads as follows:-
"Failure or impossibility to act.--
(1) The mandate of an arbitrator shall terminate and he shall be substituted by another arbitrator, if------
(a) he becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay; and
(b) he withdraws from his office or the parties agree to the termination of his mandate.
(2) If a controversy remains concerning any of the grounds referred to in clause (a) of sub-section (1), a party may, unless otherwise agreed by the parties, apply to the Court to decide on the termination of the mandate. (3) If, under this section or sub-section (3) of section 13, an arbitrator withdraws from his office or a party agrees to the termination of the mandate of an arbitrator, it shall not imply acceptance of the validity of any ground referred to in this section or sub-section (3) of section 12."
(emphasis supplied)
9. In the present case, the arbitral proceedings are pending since the year 2015. The closure of the arbitral proceedings is nowhere in sight. In the affidavit-in-reply, in ::: Downloaded on - 15/12/2022 20:31:06 :::CIS -7- paragraph 12 it is admitted that there is no permanent Arbitrator posted in the Office of the Arbitration Circle, HPPWD, Solan and .
the charge has been given to Superintending Engineer, 3rd Circle, HPPWD, Solan. Having regard to the facts and circumstances of the case, I have no hesitation in holding that the learned Arbitrator has become de jure and de facto unable to perform his function and has failed to act without undue delay. A case is made out by the petitioner to exercise powers under Section 14 of the Act.
Hence, the following order is passed:-
ORDER
(i) Mr. N.K Sood, Senior Advocate, is appointed as a sole Arbitrator to adjudicate the disputes between the parties under the Agreement. The mandate of the Superintending Engineer, Arbitration Circle, HPPWD, Solan, shall stand terminated.
(ii) The learned Arbitrator, before entering the arbitration reference, shall forward a statement of disclosure as per the requirement of Section 11(8) read with Section12(1) of the Act to the Registrar (Judicial) of this Court (to be placed on record of this application) and a copy thereof be forwarded to the parties.
(iii) The parties shall appear before the Arbitrator on a date ::: Downloaded on - 15/12/2022 20:31:06 :::CIS -8- which may be fixed by the learned Arbitrator, not later than four weeks from the date of receipt of a copy of this .
order.
(iv) The fees payable to the Arbitral Tribunal shall be as prescribed in the Fourth Schedule appended to the Arbitration and Conciliation Act, 1996.
(v) Office to forward a copy of this order to the learned Arbitrator on the following address:-
"Mr. N.K Sood, Senior Advocate 4, Pandit Padem Dev Complex, Phase-1, the Ridge Shimla, H.P."
10. The application is allowed in the above terms.
( A.A. Sayed ) Chief Justice 9th December, 2022 (priti) ::: Downloaded on - 15/12/2022 20:31:06 :::CIS