Calcutta High Court
M/S. Sudeb Kumar Banerjee vs The State Of West Bengal & Anr on 18 July, 2018
Author: Ashis Kumar Chakraborty
Bench: Ashis Kumar Chakraborty
Form No.J(2)
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
AP 192 OF 2018
M/S. SUDEB KUMAR BANERJEE
Versus
THE STATE OF WEST BENGAL & ANR.
.........
BEFORE:
The Hon'ble JUSTICE ASHIS KUMAR CHAKRABORTY
For the petitioner: Mr. Chanchal Dutta, Adv.
Ms. Krishna Mullick, Adv.
For the respondents: Mr. Paritosh Sinha, Adv.
Mr. Arindam Mondal, Adv.
Heard On: July 17, 2018
Judgment On: July 18, 2018.
Ashis Kumar Chakraborty, J.:
At the very outset, leave is granted to the petitioner to rectify the cause title of the application by deleting the name of the respondent no.2 as a party to this application.
In this application under section 11(6) of the Arbitration and Conciliation Act, 1996 (in short "the Act of 1996"), the 2 petitioner has sought for appointment of a sole arbitrator by this Court to adjudicate the disputes between the parties relating to the agreement dated December 3, 1991. Although, the arbitration agreement between the parties contained in clause 25 of the said agreement dated December 3, 1991 is not in dispute but an objection has been raised on behalf of the respondent State of West Bengal to the prayer of the petitioner for appointment of a sole arbitrator.
The brief facts giving rise to this application are that on May 3, 1991 the respondent issued a work order in favour of the petitioner for construction of a cross drainage of Dauk Nagar, Main canal in P.S. Gopalpukur. The said work order was followed by the said agreement dated December 3, 1991 between the parties containing the terms and conditions under which the petitioner was to execute the work relating to the said work order.
Clause 25 of the said agreement dated December 3, 1991 provided for adjudication of all disputes between the parties relating to the said agreement by a sole arbitrator to be appointed by the Chief Engineer of Teesta Barrage Project (hereinafter referred to as "the appointing authority").
Certain disputes arose between the parties relating to the said agreement dated December 3, 1991 and by a letter dated October 7, 1998 the petitioner invoked the arbitration agreement 3 between the parties and requested the Chief Engineer, Teesta Barrage Project to appoint an arbitrator. On November 3, 1998 the appointing authority appointed Sri K.S. Bhattacharya, the Ex- officio Chief Engineer, Irrigation and Waterways Directorate, Government of West Bengal as the arbitrator to adjudicate the disputes between the parties. Thereafter, the said Mr. K.S. Bhattacharya (hereinafer referred to as "the first arbitrator") entered upon reference and the parties filed their respective pleadings in the arbitral proceeding.
According to the petitioner, the said first arbitrator did not proceed with the arbitral proceeding regularly and, as such, the petitioner filed an application before the court of the learned Civil Judge (Senior Division), Raigunj at Uttar Dinajpur for termination of his mandate. The said application was dismissed by the learned Civil Judge (Senior Division), Raigunj. However, when the petitioner challenged the said order of dismissal by filing a revisional application, CO No. 728 of 2002 before this High Court it appeared that the said first arbitrator had retired from his service. Accordingly, by an order dated January 10, 2007 a learned single Judge of this Court disposed of said revisional application by directing the appointing authority to appoint a new arbitrator within a month from the date of communication of the said order. Thereafter, by a communication dated May, 4, 2007 the appointing authority appointed the Director of Designs, Central 4 Design Office, Irrigation and Waterways Directorate as the new arbitrator (hereinafter referred to as "second arbitrator"). After holding 12 sittings the said second arbitrator retired from his service without concluding the arbitral proceeding. Hence, the third arbitrator was appointed by the appointing authority, who was the superintending engineer of Teesta Canal Circle. After the said third arbitrator was promoted to the post of Chief Engineer, by an order dated December 8, 2017 the appointing authority once again appointed him to proceed with the arbitral proceeding till his superannuation. In the month of January, 2017 the sad third arbitrator also retired from his service without making an award.
On February 27, 2018 the petitioner filed this application seeking for appointment of a sole arbitrator by this Court. In the application it is the case of the petitioner that in view of the failure of the three consecutive arbitrators appointed by the appointing authority to adjudicate the disputes raised by it way back in the year 1998, the agreed procedure for appointment of an arbitrator has failed and, this Court should appoint an independent person as the arbitrator to adjudicate the dispute between the parties.
After the filing of the present application on April 16, 2018 the appointing authority has appointed the fourth arbitrator, namely Mr. Arup Kumar Basu, Chief Engineer, Design and Research (Irrigation and Research), Irrigation and Waterways, Government of 5 West Bengal to adjudicate the disputes between the parties till his retirement. Being prima facie satisfied with the case made out by the petitioner, by an order dated May 7, 2018 this Court directed the fourth arbitrator not to proceed with the arbitral proceeding between the parties until further order.
According to Mr. Bera when the disputes raised by the petitioner way back in the month of October, 1998 could not be adjudicated by three consecutive arbitrators appointed by the appointing authority under Clause 25 of the said agreement dated December 3, 1991 for more than 19 years it is a fit case when this Court should appoint an independent person to adjudicate the disputes between the parties. In support of such contention he relied on the decisions of the Supreme Court in the case of Union of India -Vs- Singh Builders Syndicate reported in (2009) 4 SCC 523 and in the case of North Eastern Railway and Ors. -Vs - Triple Engineering Works reported in (2014)9 SCC 288. In the case of Singh Builders Syndicate (supra), the arbitral proceeding commenced before an arbitral tribunal comprising three seving railway officers, as per the agreed procedure between the parties, did not complete over a period of ten years. The reason for such delay was that the arbitrators, who were serving railway officers, with their transfer resigned from the arbitral tribunal. In the background of the said undisputed facts, in an application filed by the contractor claimant under section 11(6) if the Act of 1996, 6 a learned single Judge of the Delhi High Court appointed a retired Judge of the High Court as the sole arbitrator to adjudicate upon the disputes between the parties. The Railway, as the respondent in the arbitral proceeding, challenged the said order passed under section 11(6) if the Act of 1996, before the Supreme Court on the ground that the learned Single Judge of the Delhi High Court committed an error of law in appointing a retired Judge of the High Court as the arbitrator in derogation of the agreed procedure laid down in clause 64 of the General Conditions of Contract providing for constitution of the arbitral tribunal with three serving railway officers. The Supreme Court found that the pendency of the arbitral proceeding for ten years was due to the act of the General Manager of the railway to nominate the arbitrators who were due for transfer and the delay in filling up the vacancies after some of the railway officers resigned from the arbitral tribunal after their transfer. While upholding the appointment of the retired Judge of the High Court as the sole arbitrator by the learned Single Judge of the Delhi High Court, in paragraph 15 of the said decision the Supreme Court held as follows:
"15. The object of the alternative dispute resolution process of arbitration is to have expeditious and effective disposal of the disputes through a private forum of the parties' choice. If the Arbitral Tribunal consists of serving officers of one of the parties to the 7 dispute, as members in terms of the arbitration agreement, and such tribunal is made non-functional on account of the action or inaction or delay of such party, either by frequent transfers of such members of the Arbitral Tribunal or by failing to take steps expeditiously to replace the arbitrators in terms of the arbitration agreement, the Chief Justice or his designate, required to exercise power under Section 11 of the Act, can step in and pass appropriate orders."
In the case of Triple Engineering Works (supra) the Supreme Court followed the above ratio in the case of Singh Builders Syndicate (supra) and held that in a case where the arbitral proceeding by an arbitral tribunal appointed as per the agreed procedure between the parties fails to attain finality for a long period, the procedure and process under the Act of 1996 are rendered futile and the power of the Court to depart from the agreed terms of appointment of arbitrators must be acknowledged. Even in the said case, when it was found that the arbitral tribunal, comprising three serving railway officers as per the agreed procedure, was unable to resolve the disputes and differences between the parties for about two decades the Supreme Court upheld the order passed by a learned Single Judge of the Patna High Court appointing a former Chief Justice of the Sikkim High Court to adjudicate upon the disputes between the partis. 8
In the present case, in its affidavit-in-opposition the respondent has not disputed the factum of pendency of the disputes raised by the petitioner unresolved for more than 19 years. Considering the facts of that case and in view of the law laid down in the above decisions of the Supreme Court, I find that the petitioner is quite justified in its contention that it is a fit case where this Court should appoint an arbitrator independent of the agreed procedure.
For the reasons as aforesaid, this application is allowed. Mr. Samit Talukder, Senior Advocate is appointed as the sole arbitrator to adjudicate upon the disputes between the parties relating to the agreement dated December 3, 1991.
The petitioner shall file its rejoinder to the amended counter statement by the respondents positively within two weeks from the date of the learned arbitrator entering upon reference.
The learned sole arbitrator is free to fix his remuneration and engage the secretarial staff for conducting the arbitral proceeding.
Fees of the learned sole arbitrator and the remuneration of the secretarial staff shall be borne by the parties in equal share.
Learned sole arbitrator is requested to make an endeavour for expeditious conclusion of the arbitral proceeding. 9
Urgent certified copies of this judgment if applied for be supplied to the parties upon compliance of all requisite formalities.
(ASHIS KUMAR CHAKRABORTY, J.) pkd./mg.