Gauhati High Court
Assam Urban Water Supply And Sewerage ... vs Subhash Project And Marketing Ltd. And ... on 10 May, 2002
Equivalent citations: 2003(1)ARBLR216(GAU)
Author: N.S. Singh
Bench: N.S. Singh
JUDGMENT N.S. Singh, J.
1 .These 2 (two) cases involve common questions of facts and law and, as such, these are taken up together for hearing today and, accordingly, the same are finally disposed of with the following judgment and order.
2. The common judgment and order passed by the Hon'ble the Chief Justice of this Court on 26.3.2002 in Arbitration Petition Nos. 4/2002 and 5/ 2002 is the subject matter under challenge in these 2 (two) writ petitions.
3. The facts of the cases in a short compass are as follows :
The present writ petitioner namely, Assam Urban Water Supply and Sewerage Board, floated a notice inviting tender on 24.9.1990 inviting bids in respect of Tinsukia Water Supply Scheme and the respondent No. 1 M/s. Subhash Project & Marketing Limited, a company registered under the Companies Act, hereinafter referred to as Company, having been found to be the lowest, the bid of the respondent No. 1-Company was accepted by the Managing Director of the petitioner-Board and, thereafter, contract agreements dated 203.1991 and 19.6.1992 were entered amongst the parties concerned. While executing the contract works, certain disputes arose between the parties concerned for which, the respondent No. 1-Company approached the Managing Director by serving notices dated 17.1.2002 to the Managing Director of the Board calling upon him to enter upon the reference within a period of 30 days to settle the related disputes with further information that failing which, the respondent No. 1-Company will be constrained to refer the matter to the appropriate forum to resolve the above disputes through arbitration as seen in the document marked as Annexure III to the writ petition. As the writ petitioner-Board failed to enter upon the references within the said period of 30 days to settle such disputes, filed Arbitration Petition Nos. 4/2002 and 5/2002 before the Hon'ble Chief Justice of this Court under Section 11 of the Arbitration and Conciliation Act, 1996, hereinafter referred to as Act of 1996, and the Hon'ble Chief Justice appointed the respondent No. 3 herein as Arbitrator under the common impugned judgment and order dated 263.2002. Being dissatisfied with the said judgment and order the petitioner filed these writ petitions.
4. Mr. C.K. Sharma Baruah, learned senior counsel appearing for the petitioners submitted that the Hon'ble the Chief Justice has not fulfilled the requirements as laid down under Section 11(6) of the Act of 1996 while passing the impugned judgment and order and apart from that, no notice was served upon the petitioner as well as upon the State of Assam before passing the impugned judgment and order and the petitioner has been condemned unheard. It is also argued by Mr. Sharma Baruah, learned senior counsel that the respondent No. 1-Company suppressed the material facts inasmuch as, the relevant clause/clauses of the original agreement were not placed before the Hon'ble Chief Justice at the time of hearing of the cases and the related Clause D-6.21 does not contemplate for appointment of an Arbitrator into reference. The learned senior counsel further argued that the respondent No. 2 disposed of the arbitration petitions by allowing it and appointing the respondent No. 3 as a sole Arbitrator to go into the disputes as raised by the respondent No. 1 Company without even issuing any notice of the said decisions either upon the writ petition or upon the Government of Assam and, as such, the entire proceedings before the respondent No. 2 is vitiated. As there is no arbitration clause in the contract agreement, the respondent No. 2 has erred in law in appointing the respondent No. 3 as Arbitrator for deciding the disputes Mr. Sharma Baruah, learned senior counsel argued. Mr. Sharma Baruah went on to contend that the impugned judgment and order is vitiated by total non application of mind inasmuch as, the respondent No. 2 in appointing the respondent No. 3 as the sole Arbitrator clearly superseded the purport and intent of the Clause D-6.21 which specifically provides that all disputes and differences between the parties have to be referred to the Managing Director of the Board whose decision shall be final and conclusive and binding on the contractor.
5. Upon hearing Mr. C.K. Sharma Baruah, learned senior counsel for the petitioner and also on perusal of the available materials on record, I am of the view that these two writ petitions are devoid of merit with the following reasons :
(i) The provision of Clause D-6.21 is relevant in the instant case and, accordingly, the same is quoted below :
"Decision of the Managing Director, Assam Urban Water Supply and Sewerage Board to be final.
Provided always thus in case any question, dispute or difference shall arise between the Engineer-in-charge and the contractor as to what additions, if any, or infairness to be made to the amount of the contract by reason of the works being delayed through no fault of the contract, or by reason of an account of any directions or requirements of the Engineer-in-charge involving increased cost to the contractor beyond the cost properly attending in carrying out of the contract according to the true intent and meaning of the signed drawings and specification or as to the works having been duly completed, or as to the construction of these presents or as to the work or as to any other matter or thing arising under or out of this contract except as to matter left during the progress of the works to the sole decision or requisition of the Engineer-in-charge under Clause D-6.2, D-6.8 and D-6.9 in case the contractor shall be dissatisfied with any certificates of the Engineer-in-charge shall withheld or not give any certificate, to which the contractor may be entitled, then such question, dispute or difference or such certificate of the value of matter which should be certified as the case may be, is to be from time to time referred to the Managing Director, Assam Urban Water Supply and Sewerage Board whose decision shall be final, conclusive and binding on the contractor."
(ii) In terms of this Clause D-6.21, the respondent No. 1-Company, served a notice dated 17.1.2002 as in Annexure-III to the writ petition calling upon the Director of the petitioner-Board to enter upon the references within a period of 30 days to settle upon the disputes as listed out in Annexure-B to the notice with further information that failing which, the respondent No. 1-Company will be constrained to refer the matter to the appropriate forum to resolve the above disputes through arbitration. Though there is no specific words for appointment of Arbitrator in respect of any dispute or differences arose between the particle in the said Clause D-6.21, according to me, it is implied that Clause D-6.21 is the arbitration clause. According to me, the respondent No. 2 has brought good common sense in interpreting the said Clause D-6.21 of the contract agreement while passing the impugned judgment and order dated 263.2002.
(iii) Section 11(6) provides that when a party fails to act as required under the related agreement or procedure or fails to perform any function entrusted to him or it under that procedure, a party may request the Chief Justice or any person or institution designated by him to take the necessary measure for securing the appointment of arbitrator. So far the arguments advanced by Mr. C.K. Sharma Baruah, learned senior counsel for non-issuance of notice either to the petitioner or State Government of Assam, the respondent No. 2 the Hon'ble the Chief Justice had dealt with the matter exhaustively. The relevant observations and findings of the respondent No. 2 in this regard are quoted below :
"As per the latest judgment of the Apex Court in Konkan Railway JT 2002(1) SC 587=2002(1) Arb. LR 326 (SC). case, it has been laid down that under the Arbitration and Conciliation Act, 19% (hereinafter referred to as the Act), the Chief Justice or his nominee, if satisfied that the party had issued a notice to the other side for appointment of an Arbitrator and to enter upon a reference and if the Chief Justice or his nominee is satisfied that the notice has been duly served and 30 days have elapsed since then and no Arbitrator has been appointed as per the agreement, then the Chief Justice or his nominee may proceed to appoint an Arbitrator under Section 11(6) of the Act even without calling upon the other side. In these two cases, I am satisfied that due notices were served on the respondent and more than 30 days have elapsed and the matters have not been referred to the Arbitrator as per the aforesaid clause.
1. As a matter of abundant caution, I may observe here that since the aforesaid clause envisage decisions of the disputes between the parties, it is an arbitration clause, as was held by the Apex Court in similar circumstances in the State of U.P. v. Tipper Chand AIR 1980 SC 1522. and Smt. Rukmanibai Gupta v. The Collector, Jabalpur and Ors. AIR 1981 SC 479. wherein it was held that if a clause in the agreement envisages a decision by a particular person regarding the dispute and differences between the parties, it amounts to an arbitration clause without there being any specific reference to the words 'arbitration' or 'arbitrator'."
6. The case law so far relied upon by Mr. C.KSharma Baruah, learned senior counsel i.e. the decision of the Apex Court rendered in Konkan Railway Corporation Ltd. and Ors. v. Mehul Construction Co.,(2000) 7 SCC 201, 2000(3) Arb. LR 162 (SC) relates to two substantial questions of law namely, (1) What is the nature of the order that is passed by the Chief Justice or his nominee in exercise of power under Section 11(6) of the Arbitration and Conciliation Act 1996 ? and (2) Even if the said order is held to be administrative in nature, what is the remedy open to the person concerned if his request for appointment of an Arbitrator is turned down by the learned Chief Justice or his nominee for some reason or other ? and in that case, the Apex Court held that the nature of the function performed by the Chief Justice being essentially to aid the constitution of the Arbitral Tribunal immediately and the legislature having consciously chosen to confer the power on the Chief Justice or his nominee is an administrative order. It is also held that an order refusing to appoint an Arbitrator will not be amenable to the jurisdiction of the Apex Court under Article 136 of the Constitution but, needless to mention such an order refusing to appoint an Arbitrator after deciding the contentious issues would be an act of non-performance of duty and in view of the what has been stated earlier, the authority concerned could be directed by mandamous to perform its duty. In the instant case, it is not a case of refusal of the request of the respondent No. 1-Company for appointment of an Arbitrator. A bare reading of Sections 13 and 16 of the Act, 1996, makes it crystal clear that question with regard to jurisdiction of the Arbitrator or any objections with respect to the existence or validity of the arbitration agreement, independence and impartiality of the Arbitrator can be raised before the Arbitrator/Arbitral Tribunal who/which would decide the same. This is the law of the land which finds its place in a decision of the Apex Court in the case of Konkan Railway Corporation Ltd. and Ors. v. Mehul Construction Co.,(2000) 7 SCC 201=2000(3) Arb. LR 162 (SC).
(supra). Suffice is made with the above discussions and observations to make the following orders :
(i) There is no infirmity in the impugned common judgment and order;
(ii) The writ petitioners-Board could not make out a case to justify the interference with the impugned common judgment and order dated 26.3.2002 passed by the Hon'ble the Chief Justice in Arbitration Petition Nos. 4/2002 and 5/2002.
7. In the result, these two writ petitions are devoid of merit and, accordingly, the same are dismissed. No costs.