Madhya Pradesh High Court
M/S Savoy Steel Industry, Lohiya ... vs Union Of India on 28 January, 2025
Author: Milind Ramesh Phadke
Bench: Milind Ramesh Phadke
1
IN THE HIGH COURT OF MADHYA PRADESH
AT GWALIOR
BEFORE
HON'BLE SHRI JUSTICE MILIND RAMESH PHADKE
ARBITRATION CASE No. 13 of 2013
M/S SAVOY STEEL INDUSTRY, LOHIYA BAZAAR,
LASHKAR GWALIOR TH; SMT. MITHLESH GUPTA
Versus
UNION OF INDIA
Appearance:
Shri Siddarth Sharrma - Advocate appeared for petitioner.
Shri Praveen Kumar Newaskar - DSG for the respondent [R-1].
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Reserved on 21/01/2025
Delivered on 28/01/2025
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ORDER
The present application under Section 11(6) of the Arbitration and Conciliation Act, 1996 has been filed for appointment of an arbitrator in lieu of non-adherence to the terms and conditions of a tender and rate contract issued by the respondents for manfuacturing and supply of furniture at Maharajpura, by the respondents.
2. Short facts leading to the present application are that the present applicant had entertained into a contract agreement 2 no.CWE (P)/MJR/03 of 86-87 for manufacturing and supply of furniture. As per the agreement a period for completion for the contract for both group A and group B was fixed as six months and in case only one group was accepted, then the period of completion was reckoned as four months. Further all the articles given in the schedule-A was required to be supplied within the period of completion as mentioned above. In the said agreement there was an arbitration clause and as per the said clause in the event of a dispute arising between the parties in relation to an event touching the terms of the contract, the parties shall be referred to an arbitrator who shall be appointed by the Chief Engineer and as a dispute with regard to payment arose, present applicant moved an application under Section 8 of the Arbitration Act, 1940 for appointment of an arbitrator. Though the said application was not maintainable, the Court hearing the said application directed Chief Engineer to appoint arbitrator as per terms of the agreement and the Chief Engineer in lieu of said order had appointed one Vimal Dutta as Arbitrator. However, the Eighth Additional District Judge cancelled the appointment of Vimal Dutta vide order dated 10.05.1994 which was challenged by respondent/Union of India in M.A. No.136/1994 in which the execution of the operation of the order passed by the Eighth Additional District Judge dated 10.05.1994, whereby the appointment of Vimal Dutta, Arbitrator was cancelled, was stayed. The said arbitrator entered into reference on 09.07.1994 and 3 though the claim was submitted by Union of India the present applicant refrained from submitting its claim and prayed postponement of the hearing and, thereafter, on 22.02.1996 one Shri D.K. Dinker, CWE (AF) Chakeri, Kanpur was appointed as the Arbitrator. Shri Dinker also resigned as an Arbitrator on 09.07.1996 and in his place one S.K. Agarwal CWE (AF) Chakeri, Kanpur was appointed as an Aribtrator. In the meanwhile, the M.A. No.136/1994 preferred at the behest of respondent/Union of India challenging the appointment of Vimal Dutta as an Arbitrator was disposed of vide order dated 24.06.2003 with the direction to the Eighth Additional District Judge to decide the application under Section 20 of the Act of 1940, pending before it as expeditiously as possible. Though panel of Arbitrator was called for appointment, but no Arbitrator could be appointed till February, 2008 as the present applicant failed to submit the list before the Court. Constrained, the Court directed to appoint the Arbitrator from the panel list submitted by the respondents/Union of India and disposed of the application of petitioner for appointment of Arbitrator vide order dated 14.10.2005.
3. In compliance of the aforesaid order, the respondents (Union of India) appointed Shri Arul Dhas, S.E as Arbitrator who entered into reference vide order dated 12.03.2008, but an objection was raised on behalf of the present applicant. On 06.10.2008, Shri A. Arul Dhas, Arbitrator again entered into reference and asked the present applicant to submit statement of 4 claim, but present applicant challenging the directions issued by the Shri A. Arul Dhas preferred an MJC No.50/2005 before the 11th District Judge, wherein notices were issued for appointment of one Shri K.N. Adholkar, CE Allahabad and Brajmohan Sharma retired CE, Gwalior as arbitrators, but thereafter no arbitral orders could be passed.
4. In the meanwhile, the Arbitration and Conciliation Act of 1996 came into force, therefore, the process of appointment of Arbitrator required to be re-initiated and the Arbitrator was now required to be appointed in light of provisions of the Act of 1996. In pursuance to the provisions of the Act of 1996 an application was submitted by the applicant to the authorities for the purpose of appointment of Arbitrator as the respondents were in due for payment of Rs.35 lakhs along with interest @18% for the work done by the applicant and as the amount was not paid and a dispute in that regard has arisen, an arbitrator was required to be appointed.
5. In the aforesaid context, the present applicant has prayed that an Arbitrator be appointed for settling the dispute between the parties.
6. A written had been filed on behalf of Union of India in which the aforesaid facts had not been controverted except for blaiming the applicant for not getting the arbitration conducted as per the provisions of the Act of 1940.
7. Another ground for rejection of the application has been 5 raised on behalf of the Union of India that one Col. M.S. Mahara was appointed as sole arbitrator who had entered into reference vide order dated 18.06.1991 and had asked the parties to submit their statement of claim and though Union of India had filed statement of claim, the present applicant instead of filing his claim had demanded certified copies of documents which were supplied through his representative on 20.12.1991, but even, thereafter, statement was not filed rather the applicant had approached Eighth Additional District Judge, Gwalior and had obtained stay of the application. Though the said stay was vacated vide order dated 11.05.1992 and directions were issued to the respondents to supply the documents to applicant and to consider the claim of applicant dated 24.07.1986 for appointment of arbitrator and the proceedings of arbitration were allowed to continue, no statements of claim was filed by the present petitioner, therefore, on 15.06.1992 an award was already passed.
8. In the written it has further been alleged that in pursuance to the order dated 11.05.1992, whereby the stay over the appointment of the Arbitrator was vacated, one Vimal Dutta was appointed as an Arbitrator and, thereafter, since he had resigned on 22.12.1995, one Shri D.K. Dinker, CWE (AF) Chakeri, Kanpur was appointed as an Arbitrator, but since he also resigned on 09.07.1996 in his place one Shri S.K. Agarwal CWE (AF) Chakery was appointed as an Arbitrator. Further it has been stated in the written that against the order of cancellation of appointment 6 of Vimal Dutta dated 10.05.1994 passed by 8th Additional District Juge, Union of India had preferred M.A. No.136/1994 which was disposed of vide order dated 24.06.2003 with certain directons to the Additional District Judges, but even after issuance of directions of Additional District Judge for appointment of an Arbitrator from the panel of the Union of India, the statement of claim was not submitted by the applicant and just had lingered on the matter which shows the conduct of the applicant that he deliberately did not participated in the arbitrary proceedings and had abused the process of the Court and since the application for appointment of the Arbitrator on earlier occasion was already decided and disposed of in MJC No.50/2005, therefore, now this second application is not maintainable and deserves to be dismissed.
ARGUMENTS.
9. Learned counsel for the applicant had submitted before this Court that since the arbitration proceedings could not be culminated prior to coming into force of the Arbitration and Conciliation Act, 1996, therefore, any order passed in pursuance to the provisions of the old Arbitration and Conciliation Act, 1940 would be of no consequence and an appointment of the Arbitrator is to be done in accordance with the provisions of the new Act of 1996, thus, any order passed prior to coming into force of the new Act of 1996 would be of no consequence.
10. It was further submitted that no Award dated 15.06.1992 as 7 contended by the respondents has been passed else the respondent/Union of India would not have participated in the proceedings before the Courts below as well as this Court which were with regard to appointment of the Arbitrator and had ultimately culminated in an order dated 14.10.2005 passed in MJC No.50/2005, whereby arbitrators were directed to be appointed. Thus, when a dispute exists in pursuance to the contract, the application deserves to be allowed and an arbitrator is required to be appointed.
11. On the other hand, learned counsel for the respondent/Union of India while referring to the orders passed by this Court in the matter of M/S. Sharda Construction vs. Union of India and Ors passed in A.C. No.95/2019 dated 13.10.2022 and in the matter of M/S Sugam Constructions (P) Ltd. vs. Union of India and Ors passed in A.C. No.16/2022 dated 20.12.2022 had argued that though the order of appointment of the Arbitrator was passed in the year, 2005 under the old Act, the applicant who was in the knowledge of the said order which was passed at his instance had preferred the present application in the year, 2013 which is time barred, therefore, the application deserves to be dismissed on the ground of delay and latches.
12. Apart from the aforesaid argument, learned counsel has also referred to the contents of the reply and had submitted that the present petition deserves to be rejected.
DISCUSSION AND CONCLUSION.
813. Heard the counsels for the parties and perused the record.
14. So far as the contention of the respondent/Union of India that on the ground of delay and latches the application is required to be rejected is concerned, this Court finds that the Division Bench of this Court in M.A. No.136/1994 decided on 24.06.2003 had directed the Court below to decide the pending application under Section 20 of the Act of 1940 and after remitting of the matter 11th Additional District Judge, from the panel of the arbitrators provided by the Union of India, had appointed one Arbitrator who had issued certain directions which were challenged in the application MJC No.50/2005, wherein vide order dated 14.10.2005 the parties were directed to appoint the panel of two arbitrators, for that notices were directed to be issued and in pursuance thereof on 07.12.2005 since the present applicant had not submitted any list, names of Shri K.N. Adholkar, CE Allahabad and Brajmohan Sharma retired CE, Gwalior were proposed to be appointed as arbitrator.
15. Admittedly, the proceedings under the old act I.e. Arbitration and Conciliation Act, 1940 reached to the extent of appointment of the arbitrators, but no arbitral proceedings commenced, thus, in wake of Section 85 of the Arbitration and Conciliation Act, 1996 the provisions of the Act of 1996 shall apply in relation to the arbitral proceedings which should commence after the said act, thus, in light of the aforesaid this Court holds that the application under Section 11(6) of the 9 Arbitration and Conciliation Act would be maintainable.
16. So far as the judgment cited by the learned counsel for the respondent/Union of India with regard to delay and latches are concerned, in the said matters a part of the dispute was already redressed and for the remaining part the dispute was raised with a delay and in that context the coordinate Bench has held that the application would be hit by delay and latches which is not the case herein. The dispute as raised by the applicant was not adjudicated upon at any point of time, therefore, on this Count also the arguments as raised by the respondents/Union of India has no force, thus, is discarded.
17. In light of the aforesaid discussion, this Court finds that since a dispute exists between the parties, for its redressal an arbitrator is required to be appointed under the provisions of Section 11(6) of the Arbitration and Conciliation Act, 1996. The application, therefore, is hereby allowed for appointment of independent Arbitrator.
18. Thus, this Court while allowing the application, directs that Shri Prashant Chande be appointed as an Arbitrator in the case, subject to the declarations made under Section 12 of the Arbitration and Conciliation Act, 1996 (as amended) with respect to the independence or impartiality of the Arbitrator, and the ability to devote sufficient time to complete the arbitration in the period specified in Section 29-A of the 1996 Act. The Arbitrator is at liberty to conduct the proceedings at a convenient venue as per 10 the convenience of the Arbitrator and the parties if so required. The arbitrator will be paid the fees in accordance with the IVth Schedule of 1996 Act. Both the parties shall bear the cost of the arbitration equally.
19. Registry is directed to dispatch a copy of this order to Shri Prashant Chande for seeking consent at the following address 201 Camy House, 3 Dhus Wadi, Dhobi Talao, Marine Line East, Behind our lady of Dollours Church, Mumbai (Maharashtra) 400002.
20. List the case for consent of the arbitrator in the week commencing 03.03.2025.
(Milind Ramesh Phadke)
Judge
chandni/ 28/01/2025
CHANDNI
NARWARI
YA
2025.01.2
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