Himachal Pradesh High Court
___________________________________________________ vs State Of H.P. And Another on 6 July, 2015
Author: Rajiv Sharma
Bench: Rajiv Sharma
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA.
Arb. Case No. 43 of 2015 .
Decided on: 6.7.2015 ___________________________________________________ Jagdish Chand. ...Petitioner.
Versus State of H.P. and another. ...Respondents. ________________________________________________________ Coram:
Hon'ble Mr. Justice Rajiv Sharma, Judge.
Whether approved for reporting? 1 For the Petitioner : Mr. Sumeet Raj Sharma, Advocate.
For the Respondents: Mr. Parmod Thakur, Addl. A.G. _____________________________________________________ Justice Rajiv Sharma, Judge (oral).
This Court on 15.11.2002 appointed Sh. D.D. Gautam Executive Engineer (Retd), as Arbitrator to adjudicate upon the dispute raised by the petitioner-
contractor in accordance with law. The Arbitrator entered into reference on 12.4.2003 and thereafter ten hearings took place in the matter. The claimant has submitted the written statement on 22.10.2007 and the 1 Whether reporters of the local papers may be allowed to see the judgment?::: Downloaded on - 15/04/2017 18:31:01 :::HCHP 2
respondents have filed the counter-written submission on 15.2.2008. Thereafter, no proceedings have been .
undertaken by the Arbitrator though a period of almost nine years has elapsed. The proceedings ought to have been concluded expeditiously.
2. Their Lordships of the Hon'ble Supreme Court in North Eastern Railway and others vs. Tripple Engineering Works, (2014) 9 SCC 288 have held that the Court can deviate from procedure agreed by the parties and exercise the power under section 11 (6) of the Arbitration and Conciliation Act, 1996 to facilitate mechanism contemplated and effectuate remedy provided under statute. Their Lordships have held as under:
"10. In the present case Clauses 64(3)(a)(ii) and (iii) of the General Conditions of Contract do not prescribe any specific qualification of the arbitrators that are to be appointed under the agreement except that they should be railway officers. As already noticed, even if the arbitration agreement was to specifically provide for any particular qualification(s) of an arbitrator the same would not denude the power of the Court acting under Section 11(6), in an appropriate case to depart therefrom. In Singh Builders Syndicate pendency of arbitration proceedings for over a decade was found by this Court to be a mockery of the process. In the present case, admittedly the award in respect ::: Downloaded on - 15/04/2017 18:31:01 :::HCHP 3 of disputes and differences arising out of the contract No. CAO/CON/722 is yet to be passed. Though the appellant- Railway has in its pleadings made a feeble attempt to .
contend that the process of arbitration arising out of the said Contract has been finalized, no material, whatsoever, has been laid before the Court in support thereof. The arbitration proceedings to resolve the disputes and differences arising out of Contract No. CAO/CON/738 has not even commenced. A period of nearly two decades has elapsed since the contractor had raised his claims for alleged wrongful termination of the two contracts. The situation is distressing and to say the least disturbing. The power of the Court under the Act has to be exercised to effectuate the remedy provided thereunder and to facilitate the mechanism contemplated therein. In a situation where the procedure and process under the Act has been rendered futile, the power of the Court to depart from the agreed terms of appointment of arbitrators must be acknowledged in the light of the several decisions noticed by us."
3. Similarly, in a recent judgment, their Lordships of the Hon'ble Supreme Court in Union of India and others vs. Uttar Pradesh State Bridge Corporation Limited, (2015) 2 SCC 52 have held that when there is failure on the part of Arbitral Tribunal to act and it is unable to perform its function either de jure or de facto, it is open to a party to arbitration proceedings to approach the court to decide on the termination of its mandate and seek appointment of ::: Downloaded on - 15/04/2017 18:31:01 :::HCHP 4 substitute arbitrator. Their Lordships have held as under:
.
"12. As is clear from the reading of Section 14, when there is a failure on the part of the Arbitral Tribunal to act and it is unable to perform its function either de jure or de facto, it is open to a party to the arbitration proceedings to approach the Court to decide on the termination of the mandate. Section 15 provides some more contingencies when mandate of an arbitrator can get terminated. In the present case, the High Court has come to a categorical finding that the Arbitral Tribunal failed to perform its function, and rightly so. It is a clear case of inability on the part of the members of the Tribunal to proceed in the matter as the matter lingered on for almost four years, without any rhyme or justifiable reasons. The members did not mend their ways even when another life was given by granting three months to them. Virtually a pre-emptory order was passed by the High Court, but the Arbitral Tribunal remained unaffected and took the directions of the High Court in a cavalier manner. Therefore, the order of the High Court terminating the mandate of the arbitral tribunal is flawless. This aspect of the impugned order is not even questioned by the Appellant at the time of hearing of the present appeal. However, the contention of the Appellant is that even if it was so, as per the provisions of Section 15 of the Act, substitute arbitrators should have been appointed "according to the rules that were applicable to the appointment of the arbitrator being replaced". On this basis, it was the submission of Mr. Mehta, learned ASG, that High Court should have resorted to provision contained in Clause 64 of the GCC."
4. In the instant case, the proceedings have not been concluded for the last 13 years of the ::: Downloaded on - 15/04/2017 18:31:01 :::HCHP 5 appointment of the Arbitrator. The progress made by the Arbitrator was tardy and it would take another ten .
years to conclude the proceedings, which would further result in miscarriage of justice. If the arbitration proceedings are not concluded expeditiously, litigants may loose faith in arbitration mechanism. Though Sh.
D.D. Gautam, Executive Engineer (Retd.) was appointed as Arbitrator, but since he was not able to conclude the proceedings for the last 13 years, the Court is constrained to terminate his appointment and to appoint Sh. Sanjeev Sharma, Advocate and Mr. Yogesh Kumar Chandel, Advocate as assisting Arbitrator. It shall be open to the Arbitrator to determine his own procedure with the consent of the parties. It shall also be open to the Arbitrator to fix his fee alongwith the fee of assisting Arbitrator. The award shall be made strictly as per the provisions of the Arbitration and Conciliation Act, 1996 within six months. Needless to add that the Arbitrator shall pass a speaking order.
The Registry of this Court is directed to immediately inform Mr. Sanjeev Sharma, Advocate and Mr. Yogesh ::: Downloaded on - 15/04/2017 18:31:01 :::HCHP 6 Kumar Chandel, Advocate about the passing of the order by sending a copy of this order to them. Sh. D.D. .
Gautam, Executive Engineer (Retd.) is directed to hand over the records to newly appointed Arbitrator forthwith. It is made clear by way of abundant precaution that Mr. Sanjeev Sharma, Advocate will commence the proceedings from the stage the appointment of Sh. D.D. Gautam, Executive Engineer (Retd.) as Arbitrator is terminated for the speedy disposal of the arbitration proceedings.
5. In view of this, the petition stands disposed of. Pending application, if any, also stands disposed of.
No costs.
(Justice Rajiv Sharma), Judge.
6.7.2015 *awasthi* ::: Downloaded on - 15/04/2017 18:31:01 :::HCHP