Orissa High Court
M/S. Rawani Construction vs National Thermal Power Corporation ... on 18 December, 2020
Author: Mohammad Rafiq
Bench: Mohammad Rafiq
IN THE HIGH COURT OF JUDICATURE FOR ORISSA
AT CUTTACK
ARBP No. 42 OF 2019
M/s. Rawani Construction ..... Petitioner
-Versus-
National Thermal Power Corporation Ltd. ..... Opp.Party
Advocate(s) who appeared in this case through Video Conferencing mode:-
________________________________________________________________
For Petitioner : Mr. Sidharth Shankar Padhy,
Mr. A.P. Rath, Mr. S. Jena,
Mr. K. Ansari, Mr. P. Panda,
Advocates
For Opp. Party :
Mr. B.S. Tripathy, Mr. A. Tripathy,
Mr. A. Sahoo, Advocates
_______________________________________________________________
HONOURABLE THE CHIEF JUSTICE MR. MOHAMMAD RAFIQ
JUDGMENT
18.12.2020 Per: Mohammad Rafiq, CJ.
This arbitration petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (in short "Act, 1996") has been filed by the petitioner- M/s. Rawani Construction, represented through its Partner Sri Nimeesh Kumar Rawani praying for appointment of an independent arbitrator to adjudicate the dispute arising out of the agreement dated 01.10.2004 (Annexure-1) executed between the parties.
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2. Bereft of unnecessary details, the facts giving rise to this petition are that pursuant to a tender process, the opposite party awarded the contract in favour of the petitioner for execution of the work of "Construction of 44 nos of 'D' type quarters at Permanent Township of TSTPP (Package-V)"
and accordingly, agreement dated 01.10.2004 (Annexure-1) was executed between the petitioner and the opposite party. According to the petitioner, the opposite party committed several breaches during execution of the work for which the petitioner sustained loss and incurred additional cost. The petitioner therefore invoked Clause 56 of the General Conditions of Contract read with Clause 7 of the contract agreement and Clause 20 thereof and requested the Chairman-cum-Managing Director of the opposite party-Corporation to appoint an arbitrator. Accordingly, Shri Surendra Gandotra was appointed by the opposite party as the Sole Arbitrator to adjudicate the dispute between the parties.
3. It is the case of the petitioner that the learned Sole Arbitrator did not conduct the arbitration proceeding as per the provisions of the Act, 1996. Therefore, the petitioner approached the learned District Judge, Angul by filing an application i.e. Arbitration Case No.25 of 2014 under Sections 14(2) and 15 of the Act, 1996 praying for termination of the mandate of learned Arbitrator.
4. Mr. S.S. Padhy, learned counsel for the petitioner has submitted that the petitioner vide letter dated 09.02.2017 approached the Chairman- cum-Managing Director of the opposite party-Corporation as per Clause 56 of 3 the General Conditions of Contract requesting to appoint a new arbitrator in place of Sri Surendra Gandotra, whose mandate was terminated by the learned District Judge, Angul. The said letter dated 09.02.2017 was received by the opposite party on 14.02.2017 as per the postal acknowledgement, yet the Chairman-cum-Managing Director has failed to appoint any arbitrator in terms of Clause 56 of the General Conditions of Contract. Since the opposite party did not act upon as per the provisions of the Act, 1996 as well as the conditions stipulated in the agreement and more than 30 days has elapsed, the petitioner has now constrained to file the present arbitration petition under Section 11(6) of the Act, 1996 seeking appointment of an independent arbitrator.
5. In support of his argument, learned counsel for the petitioner has relied upon the judgments of the Supreme Court in the case of Datar Switchgears Ltd. vs. Tata Finance Ltd. and another, reported in (2000) 8 SCC 151; Deep Trading Company vs. Indian Oil Corporation and Others, reported in (2013) 4 SCC 35 and Uttarkhand Purv Sainik Kalyan Coal Field Limited vs. Northern Coal Field Limited, reported in (2020) 2 SCC 455 and argued that in view of sub-section (6-A) of Section 11, which has been inserted in 2015 Amendment Act, this Court has no other jurisdiction except to see the arbitration clause. Once the parties have entered into the agreement containing arbitration clause, appointment of arbitrator has to automatically follow.
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6. Mr. B.S. Tripathy, learned counsel for the opposite party contended that the opposite party has never forfeited its right of appointment of arbitrator only because the petitioner has served notice on the Chairman- cum-Managing Director on 09.02.2017, which was received by him on 14.02.2017. It is submitted that the order passed by the District Judge, Angul terminating the mandate of the arbitrator Sri Surendra Gandotra was challenged by the petitioner in W.P.(C) No.12742 of 2014. In view of pendency of the writ petition, the arbitrator adjourned the proceedings and finally the petitioner withdrew the above writ petition on 24.07.2014 with liberty to move the Civil Court at Angul. The petitioner then filed Arbitration Case No.25 of 2014 on 02.08.2014 before the District Judge, Angul. The opposite party filed its preliminary objection in the said arbitration case on 27.10.2014. The learned District Judge passed order/judgment on 02.04.2016 terminating the mandate of the Arbitrator and directed the opposite party to appoint a new arbitrator in terms of Clause 57 of the GCC. The petitioner then filed an application in that very Court on 27.12.2016 seeking correction of error in para-10 of the judgment dated 02.04.2016 passed in ARBP No.25 of 2014. In the meantime, the opposite party-NTPC had filed CMP No.48 of 2017 before this Court seeking to quash the judgment dated 02.04.2016 passed by the learned District Judge, Angul. The learned District Judge thereafter on 17.01.2017 corrected the error crept in the judgment dated 02.04.2016. This Court in CMP No.48 of 2017 while issuing notice to the opposite party on 18.01.2017 was pleased to pass an order staying operation of the judgment dated 02.04.2016 passed by the District Judge, Angul. It was thereafter the 5 petitioner vide its letter dated 09.02.2017 requested the opposite party-NTPC to appoint a new arbitrator. On 25.02.2017, the opposite party-NTPC filed Misc. Case No.305/2017 seeking amendment in the prayer made in CMP No.48 of 2017 incorporating a prayer to quash the order dated 17.01.2017 passed by the learned District Judge, Angul. On 30.01.2019, on oral prayer of the petitioner, CMP No.48 of 2017 was converted to CRP No.02 of 2019. Thereafter, this Court on 05.08.2019 passed judgment dismissing the CRP and confirming the order dated 02.04.2016 passed by the learned District Judge, Angul in ARBP No.25 of 2014.
Learned counsel for the opposite party has further submitted that during pendency of the CRP, the erstwhile arbitrator passed away on 19.12.2018, which fact has been taken note of by this Court in its order dated 05.08.2019. Since operation of the order passed by the District Judge, Angul was stayed by this Court, which continued till disposal of the CRP vide order dated 05.08.2019, there was no occasion for the opposite party-NTPC to appoint another arbitrator in terms of Clause 56 of the General Conditions of Contract. But immediately after disposal of CRP by this Court, the Chairman- cum-Managing Director of the opposite party-Corporation appointed Sri S.C. Sinha, IPS (Retd) as the sole arbitrator for adjudication of the dispute. Learned counsel for the opposite party therefore submitted that the present application is not maintainable.
7. In support of his submission, learned counsel for the opposite party has relied upon the decision of the Supreme Court in the case of 6 Yashwith Construction P. Ltd. vs. Simplex Concrete Piles India Ltd., reported in (2006) 6 SCC 204; Bharat Broadband Network Limited vs. United Telecoms Limited, (2019) 5 SCC 755.
8. I have given my careful consideration to rival submissions of learned counsel for the parties and perused the record as well as the decisions of the Supreme Court cited by them in support of their submission.
9. The judgments of the Supreme Court cited by the petitioner in Datar Switchgears Ltd. (supra), Deep Trading Company (supra) and Uttarkhand Purv Sainik Kalyan Coal Field Limited (supra), are distinguishable on facts of the present case. Merely because the petitioner served a notice on the opposite party to appoint a new arbitrator and the Chairman-cum-Managing Director of the opposite party-Corporation did not appoint the arbitrator despite service of notice, the right of the opposite party to make such appointment did not stand forfeited. Otherwise, precisely it can be said that the order dated 02.04.2016 passed by the District Judge, Angul terminating the mandate of the arbitrator was challenged before this Court by none other than the petitioner. This Court vide order dated 18.01.2017 while issuing notice, stayed the operation of the aforesaid judgment dated 02.04.2016 passed by the learned District Judge. Subsequently, on the oral prayer of the opposite party, the said case was converted into CRP No.2 of 2019. In that case interim order was passed staying operation of the order dated 02.04.2016 passed by the learned District Judge, Angul in ARBP No.25 of 2014 continued to operate till final disposal of the CRP. It was only after 7 dismissal of the CRP on 05.08.2019 that Chairman-cum-Managing Director, NTPC could have appointed a fresh arbitrator which it did and sent a communication thereafter to the petitioner through Addl. GM (Law) vide letter dated 06.12.2019. A copy of this letter was sent to the petitioner.
10. The Supreme Court of India in Bharat Broadband Network Limited (supra) has categorically held that the provisions of the Amendment Act, 2015, Section 26 of the Act, 1996 shall not apply to arbitral proceeding which have commenced in terms of the provision of Section 21 of the Act, 1996 unless the parties have otherwise agreed. In that case, request was received by the employer much before commencement of the Amendment Act, 2015 for invoking arbitration. The Supreme Court held that the request made by the contractor shall have to be examined in accordance with the principal Act, 1996 without taking resort to the Amendment Act, 2015 which came into force with effect from 23.10.2015. It was held that even when a party does not appoint an arbitrator, after request from other side, the Court should first appoint the arbitrator in the manner provided in the Act, 1996.
11. In the present case, the Chairman-cum-Managing Director of the opposite party-Corporation, who was competent to appoint another arbitrator on the request of the petitioner, but on account of the interim order operating in CMP/CRP filed against the order of the learned District Judge, Angul, which continued to remain in force till final disposal of the CRP, he could not proceed to do so. The earlier arbitrator passed away on 19.12.2018 during pendency of the CRP, which was dismissed by this Court on 05.08.2019. It is thereafter 8 only the Chairman-cum-Managing Director, NTPC appointed the new arbitrator and informed the petitioner by communication dated 06.12.2019.
12. In view of the above, I do not find any merit in the arbitration petition, which is liable to be dismissed. Accordingly, ARBP stands dismissed. However, it would be open for the petitioner to participate in the arbitral proceedings before the sole arbitrator appointed by the opposite party- Corporation.
As restrictions are continuing for COVID-19, learned counsel may utilize the soft copy of this judgment available in the High Court's official website or print out thereof at par with certified copies in the manner prescribed, vide Court's Notice No.4587 dated 25.03.2020.
(Mohammad Rafiq) Chief Justice //S.K. Jena//P.A.