Himachal Pradesh High Court
Kaka Bakers vs National on 26 August, 2022
Author: A.A. Sayed
Bench: A.A. Sayed
IN THE HIGH COURT OF HIMACHAL PRADESH
AT SHIMLA
ON THE 26th DAY OF AUGUST, 2022
.
BEFORE
HON'BLE MR. JUSTICE A.A. SAYED,
CHIEF JUSTICE
ARBITRATION CASE No.82 of 2022
Between:-
M/S. JAI PRAKASH & SONS,
HEAD OFFICE: NEW VASANT
VIHAR ENCLAVE, NAYA PURVA,
OPPOSITE STREET NO.2, NEAR
KAKA BAKERS, DEHRADUN,
UTTRAKHAND-248 001,
THROUGH ITS GENERAL POWER
OF ATTORNEY, SH. VIKUN MITTAL,
S/O SH. VINOD MITTAL, R/O 222-A,
LUNIA MOHALLA, DEHRADUN,
UTTRAKHAND.
......PETITIONER
(BY MR. RAKESH GUPTA AND
MR. SANJAY VASUDEVA, ADVOCATES)
AND
1. NATIONAL INSTITUTE OF
TECHNOLOGY (NIT), HAMIRPUR,
TEHSIL AND DISTRICT HAMIRPUR,
HIMACHAL PRADESH,
THROUGH ITS DIRECTOR.
2. EXECUTIVE ENGINEER,
NATIONAL INSTITUTE OF
TECHNOLOGY (NIT),
CONSTRUCTION CELL,
HAMIRPUR, TEHSIL AND
DISTRICT HAMIRPUR,
HIMACHAL PRADESH.
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2
3. ER. VIKAS SOOD,
SOLE ARBITRATOR -CUM-
SUPERINTENDING ENGINEER,
CSKHPKV, PALAMPUR, DISTT.
.
KANGRA, HIMACHAL PRADESH.
......RESPONDENTS
(MR. BALRAM SHARMA,
ASSISTANT SOLICITOR GENERAL
OF INDIA, FOR R-1 & R-2;
NONE FOR R-3)
This petition coming on for orders this day, the Court
delivered the following:
JUDGMENT
This is an application filed by the petitioner invoking Section 14 and Section 15 of the Arbitration and Conciliation Act, 1996 (for short 'the Act'), seeking to terminate the mandate of respondent No.3-Arbitrator and to appoint a substitute Arbitrator.
2. Respondent No.1-National Institute of Technology (NIT) Hamirpur, had floated a tender for construction of Mega Hostel at NIT Hamirpur (civil, plumbing and electric work of block-I). The petitioner participated in the tender and emerged as the successful bidder. The work was awarded to the petitioner and a letter of acceptance dated 11.04.2016 was issued by respondent No.1 to the petitioner. An agreement was executed between the parties.
::: Downloaded on - 24/12/2022 09:40:49 :::CIS 33. Since disputes and differences arose between the parties, the petitioner invoked Clause-25 of the Agreement and .
served a notice dated 03.09.2019 and requested the respondent No.1 to refer the matter to the Disputes Redressal Committee.
Since there was no response, the petitioner filed Arbitration Case No.36 of 2020 (M/s Jai Prakash & Sons and anr. Vs. National Institute of Technology and anr.) in this Court under Section 11(6) of the Act for appointment of arbitrator. This Court vide order dated 26.03.2021 appointed respondent No.3-Arbitrator-cum-
Superintending Engineer, CSKHPKV, Palampur, District Kangra, Himachal Pradesh, as Arbitrator to adjudicate the disputes between the parties. The said order dated 26.03.2021 reads as under:-
"By way of the present petition filed under Sub Section 6 of Section 11 of the Arbitration and Conciliation Act, 1996, the petitioners are seeking a direction for appointment of an Arbitrator.
2. Considering the submissions and prayer made on behalf of the petitioners, the present petition is allowed and Er. Vikas Sood, Superintending Engineer, H.P. Agricultural University, Palampur, is appointed an Arbitrator for adjudication of the dispute involved in the present petition. He is requested to enter into reference within a period of two weeks from the date of receipt of a copy of this order. It shall be open ::: Downloaded on - 24/12/2022 09:40:49 :::CIS 4 for learned Arbitrator to determine his own procedure with the consent of the parties. Otherwise also, entire procedure with regard to fixing of time limit for filing .
pleadings or passing of Award stands prescribed under Sections 23 and 29A of the Act.
3. Needless to say that award shall be made strictly as per provisions contained in Arbitrator and Conciliation Act. A copy of this order shall be made available to learned Arbitrator, named above, by the Registry of this Court within a period of one week from today, enabling him to take steps for commencement of the arbitration proceedings within the stipulated period.
4. The petition stands disposed of accordingly, so also pending miscellaneous application(s), if any."
4. Respondent No.3-Arbitrator entered upon a reference, and in its meeting on 09.06.2021, directions were issued by respondent No.3 to the petitioner to file statement of claim within fifteen days from the receipt of the said letter and respondent No.1 was directed to file statement of defence and the arbitration proceeding was adjourned to 26.07.2021. On 09.07.2021, the petitioner moved an application before respondent No.3 seeking directions to the respondent No.1 for providing certain documents.
According to the petitioner since there was a delay in supplying the documents, the statement of claim could not be filed in time and an application was moved before respondent No.3 on ::: Downloaded on - 24/12/2022 09:40:49 :::CIS 5 09.07.2021 for extension upto 15.10.2021.
5. It is the case of the petitioner that though it filed the .
statement of claim vide letter dated 21.10.2021, the respondent No.3 did not hold any meeting after the first meeting on 09.06.2021 and no statement of defence was filed by the respondents No.1 and
2. Respondents No.1 and 2 did not file any statement of defence nor requested for grant of extension of time to file the statement of defence. The petitioner by its letter dated 05.12.2021 requested respondent No.3 to expedite the submission of statement of defence, so that the arbitral proceedings may be concluded without further delay and that in case respondent Nos.1 and 2 did not submit statement of defence, they may be debarred from submitting the same under the provisions of the Act. A copy of the said letter was forwarded to the respondents No.1 and 2.
According to the petitioner, since neither the statement of defence was filed by respondent Nos.1 and 2 nor did respondent No.3 take up the matter for hearing after the first meeting on 09.06.2019, the petitioner sent a detailed representation dated 05.02.2022 to respondent No.3 inter alia referring to Section 25 of the Act, which provides for time-lines for completion of the pleadings. The petitioner sent further communications to respondent No.3 dated ::: Downloaded on - 24/12/2022 09:40:49 :::CIS 6 05.02.2022, 12.03.2022 and 25.05.2022 to which there was no response. According to the petitioner, since respondent No.3 did .
not show any interest in conducting the arbitral proceedings, the petitioner was left with no other remedy except to file the present petition seeking substitution of the arbitrator (respondent No.3).
6. It is pointed out by the learned counsel for the petitioner that the respondent No.3 has not conducted the arbitral proceedings for nearly one year despite several communications by the petitioner. It is urged that the mandate of the arbitrator be terminated in terms of Section 14(1)(a) of the Act and a substitute arbitrator be appointed in view of undue delay in making the award and directions be issued to the reconstituted Arbitral Tribunal to expedite the hearing of the arbitral proceedings and conclude the same in terms of the time frame provided under Section 29A of the Act.
7. In the affidavit-in-reply, the respondent Nos.1 and 2 have not controverted the averments made by the petitioner in the application.
8. I have heard learned counsel for the petitioner and learned Assistant Solicitor General appearing on behalf of respondent Nos.1 and 2.
::: Downloaded on - 24/12/2022 09:40:49 :::CIS 79. It would be apposite to extract the provisions of the Act to the extent relevant for the purpose of the present application.
.
They read as follows:-
"14. 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 r 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.
::: Downloaded on - 24/12/2022 09:40:49 :::CIS 823. Statements of claim and defence. --
(1) to (3) xxxx xxxx xxxx
.
(4) The statement of claim and defence under
this section shall be completed within a period of six months from the date the arbitrator or all the arbitrators, as the case may be, received notice, in writing of their appointment.
25. Default of a party. --
Unless otherwise agreed by the parties, where, without showing sufficient cause, --
r (a) the claimant fails to communicate his statement of claim in accordance with sub-section (1) of section 23, the arbitral tribunal shall terminate the proceedings;
(b) the respondent fails to communicate his statement of defence in accordance with sub-section (1) of section 23, the arbitral tribunal shall continue the proceedings without treating that failure in itself as an admission of the allegations by the claimant and shall have the discretion to treat the right of the respondent to file such statement of defence as having been forfeited.
(c) a party fails to appear at an oral hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the ::: Downloaded on - 24/12/2022 09:40:49 :::CIS 9 arbitral award on the evidence before it.
29A.Time limit for arbitral award. --
.
(1) The award in matters other than
international commercial arbitration
shall be made by the arbitral tribunal within a period of twelve months from the date of completion of pleadings under sub-section (4) of section 23:
(2) xxxx xxxx xxxx (3) The parties may, by consent, extend the period specified in sub-section (1) for making award for a further period not exceeding six months.
(4) If the award is not made within the period specified in sub-section (1) or the extended period specified under sub-
section (3), the mandate of the arbitrator
(s) shall terminate unless the Court has, either prior to or after the expiry of the period so specified, extended the period:
..........................."
(emphasis supplied)
10. In the present case, it is an admitted position that after the respondent No.3 entered upon a reference and the first meeting being held on 09.06.2021 and notwithstanding the repeated communications by the petitioner, no further hearing of the arbitral proceedings was held by respondent No.3. This, ::: Downloaded on - 24/12/2022 09:40:49 :::CIS 10 despite the fact that in the earlier round of litigation when the petitioner had filed a petition under Section 11(6) of the Act, this .
Court, while appointing respondent No.3 as Arbitrator, made specific reference to Sections 23 and 29A of the Act in respect of the time-lines for the completion of the pleadings and making the arbitral award. Evidently, the time limit for filing pleadings by respondent Nos.1 and 2 for making the award by the respondent No.3, as prescribed under Sections 23(4) and 29A of the Act, respectively, have not been adhered to. As stated earlier, the respondent Nos.1 and 2 have not controverted the averments made by the petitioner in the application.
11. Having regard to the facts and circumstances of the case, I have no hesitation in holding that respondent No.3- Arbitrator has become de jure or de facto unable to perform his functions and has failed to act without undue delay and a case is made out by the petitioner for this Court to exercise powers under Section 14(1)(a) of the Act. Hence, the following order:-
ORDER
(i) Mr. Justice Rajiv Sharma, former Judge of this Court, is appointed as substitute Arbitrator to adjudicate the disputes between the parties under ::: Downloaded on - 24/12/2022 09:40:49 :::CIS 11 the Agreement, in place of respondent No.3-
Arbitrator, whose mandate 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 Section 12(1) of the Arbitration and Conciliation Act, 1996, 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 prospective Arbitrator on a date which may be fixed by the learned Arbitrator, not later than four weeks from the date of receipt of copy of this order by him;
(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:
::: Downloaded on - 24/12/2022 09:40:49 :::CIS 12"Mr. Justice Rajiv Sharma, former Judge, High Court of Himachal Pradesh, House No.505, Sector 36-B, .
Chandigarh".
12. The application is allowed in the above terms.
(A.A. Sayed) Chief Justice August 26, 2022 (Bhardwaj) ::: Downloaded on - 24/12/2022 09:40:49 :::CIS