Delhi High Court - Orders
M/S Ketan Construction Company vs M/S Alpha Corp Development Private ... on 28 July, 2022
Author: Neena Bansal Krishna
Bench: Neena Bansal Krishna
$~10
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P. (T) (COMM.) 62/2020 & I.A. 9539/2020 (Exemption)
M/S KETAN CONSTRUCTION COMPANY ..... Petitioner
Through: Mr. Sanjay Bansal, Advocate.
versus
M/S ALPHA CORP DEVELOPMENT PRIVATE LIMITED
..... Respondent
Through: Mr. Surjendu Sankar Das, Mr. Vikash
Verma & Ms. Annie Mittal,
Advocates.
CORAM:
HON'BLE MS. JUSTICE NEENA BANSAL KRISHNA
ORDER
% 28.07.2022
1. A petition under Section 14 & 15 of Arbitration & Conciliation Act, 1996 (hereinafter referred to as "the Act") has been filed on behalf of the petitioner seeking substitution of the Arbitrator.
2. The facts in brief as narrated in the petition are that the parties entered into an Agreement dated 10th January, 2013 for the work of proposed Alpha International City at village Baldi, Kailash, Tikri and Uchana at Karnal, Haryana work order for Road, Pavements and External Development works (Phase-II) vide Work Order No.AGDPL/ANK/AICK-II: KCC/WO1743 which contains Clause providing for arbitration. The stipulated date of start and completion of work was 24th January, 2013 and 23rd July, 2013 respectively and the work was expected to be completed within six month. However, the work could not be completed on account of lapses on the part Signature Not Verified Digitally Signed M/s Ketan Construction Co. vs. M/s Alpha Corp. Development Pvt. Ltd. Page 1 of 9 By:NIRMLA TIWARI Signing Date:10.08.2022 13:53:51 of respondent and the period was extended up to July, 2014. However, the work got further extended and prolonged at the hands of the respondents. Dispute arose in regard to the work contract. It is claimed by the petitioner that the respondents wrongly and unilaterally short closed the Contract without any legal justification and they also got an FIR lodged to pressurize the petitioner and thereafter settled the matter and the FIR was quashed before the High Court of Punjab and Haryana. It is asserted that the respondent failed to release legitimate payments for getting the work executed. The petitioner invoked arbitration Clause 52 vide its letter dated 30th December, 2017 subsequent to which the respondents appointed an Arbitrator vide letter dated 29th January, 2018. The parties were called to appear before the learned Arbitrator on 05th June, 2018, vide his letter dated 30th May, 2018 stating therein that the consent of the parties was sought. The petitioner without prejudice filed a Statement of Facts though he at the same time challenged his jurisdiction and filed a petition for appointment of the Arbitration under Section 11 of the Act, vide Arbitration Petition No.789/2018, but the same was dismissed by this Court even without issuing Notice to the opposite party vide order dated 22nd October, 2018. The petitioner, thereafter challenged the jurisdiction of the Arbitrator before him but his application was dismissed on 14th February, 2019 by the learned Arbitrator.
3. In the mean while the petition filed another petition for termination of mandate of Arbitrator on 14th March, 2019 on various grounds, but was withdrawn by the petitioner on 19th July, 2019. The respondent at the same time had also filed another petition for extension of time.
4. The Arbitrator adjourned the matter from 23rd March, 2019 and was Signature Not Verified Digitally Signed M/s Ketan Construction Co. vs. M/s Alpha Corp. Development Pvt. Ltd. Page 2 of 9 By:NIRMLA TIWARI Signing Date:10.08.2022 13:53:51 adjourned for future dates. The respondent sought time to file rejoinder to the reply of counter-claim which was finally filed on or about 22nd August, 2019. The petitioner then filed sub-rejoinder and both the parties submitted their proposed issues. The learned Arbitrator, however, framed the issued on 02nd January, 2020 i.e. after three months of submission of proposed issues and fixed the next date for 10th January, 2019 even though the petitioner was out of country. However, no date thereafter has been fixed in the matter. The tenure of the learned Arbitrator stands expired on 18th January, 2019 and no profess has been made by the Learned Arbitrator. The claim of the petitioner is for about 2 crores for the work done and for release of Performance Guarantee and Retention money.
5. The respondent with an intention to get the cost of arbitration increased and raise counter-claim of Rs.1 Crores 18 lakhs approximately with interest and cost which was beyond the period of three years from the date of termination of contract. The petitioner has raised preliminary objections regarding limitation in respect of the counter-claim.
6. Despite the admissions of the respondent, no preliminary issue has been framed by the Arbitrator in respect of the limitation. It is further submitted that in response to the consent sought by the learned Arbitrator toward his appointment by the respondent, the petitioner had raised his objections regarding his mandate having expired on 29th January, 2019 i.e after a period of 12 months of his appointment. Furthermore, the letter dated 29th January, 2018 vide which he was appointed as an Arbitrator by the Respondent Company was in the custody of Arbitrator and was enclosed with letter dated 30th May, 2018 sent by the Arbitrator. The period of 12 months is thus, claimed to have expired on 29th January, 2019.
Signature Not Verified Digitally Signed M/s Ketan Construction Co. vs. M/s Alpha Corp. Development Pvt. Ltd. Page 3 of 9 By:NIRMLA TIWARI Signing Date:10.08.2022 13:53:517. It is further submitted that the very fact that Arbitrator was in possession of the letter dated 29th January, 2018 which became part of the letter dated 30th May, 2018 shows that he got the letter from the respondent but in order to save the period of twelve months, he got another letter dated 27th May, 2018 issued for seeking consent of the petitioner. It is claimed that this shows the manipulation by the learned Arbitrator. It is claimed that the conduct of the learned Arbitrator while conducting the arbitration proceedings has created doubt in its mind as to his independency and impartiality to conduct the arbitration proceedings. Furthermore, he is ineligible to be appointed as Arbitrator as he suffers from disqualifications stipulated under Section 12(5) and the Seventh Schedule of the Act. Hence, the present petition has been filed for termination of the mandate of the Arbitral Tribunal and to substitute an independent Arbitrator preferably an independent retired Civil Engineer from CPWD or retired Judge of High Court of Delhi in terms of arbitration Clause 52 of the Agreement.
8. The respondent in its reply has submitted that the objections taken by the petitioner may be subdivided into two categories. The first category relating to alleged delay on the part of the Arbitral Tribunal in acting expeditiously and the second category is of de jure disqualification of the Arbitrator in terms of the judgment of the Hon'ble Supreme Court of India Perkins Eastman Architects DPC & Anr. vs. HSCC (India) Ltd. AIR 2020 SC 59. In respect of the first category the Parliament by way of Section 29(A) introduced in Arbitration and Conciliation Act, 1996 to address these concerns. The second category in regard to de jure disqualifications falls under the rubric of Section 12(5) read with Seventh Schedule of the Act. The averments made in the petition do not apposite for exercise of powers Signature Not Verified Digitally Signed M/s Ketan Construction Co. vs. M/s Alpha Corp. Development Pvt. Ltd. Page 4 of 9 By:NIRMLA TIWARI Signing Date:10.08.2022 13:53:51 under Section 14 & 15 of the Act. It is explained that the petitioner had preferred OMP(T) (COMM) 32/2019 wherein it was contended that the arbitrator appointed by the respondent has no jurisdiction to adjudicate on the principle of "qui facit per alium facit per se". It was also claimed that if an Arbitrator is illegible to be appointed as an Arbitrator as he suffers from disqualification stipulated under Section 12(5) and the party persists in appointing him as an Arbitrator, this Court has powers under Section 14(2) of the Act to terminate the mandate of the Arbitrator. However, this petition filed under Section 14(2) of the Act was unconditionally withdrawn by the petitioner vide order dated 19th July, 2019. No liberty had been sought by the petitioner to re-agitate the same grounds nor was the issue kept open. Rather, after the withdrawal of the petition, the petitioner has been actively participating in the arbitration proceedings and has submitted sub-rejoinder and proposed issues. The petitioner has consciously waived and abandoned this ground of challenge. This claim that the petitioner is now seeking to re-agitate this ground despite waiver and abandonment and cannot be taken up in the present petition.
9. It is further asserted that without prejudice the case of the petitioner at best falls under Section 29(A) of the Act for extension of the term of the Arbitrator. A reference has been made to the Law Commission of India which while proposing the introduction of Section 29(A) had observed that there is no point in terminating the arbitration proceedings on expiry of the term of the Arbitrator after one year and as such termination may indeed result in waste of time and money for the parties after lot of evidence having been led. It is thus, proposed that the parties may file an application and seek extension from the Court which may be granted subject to any order as Signature Not Verified Digitally Signed M/s Ketan Construction Co. vs. M/s Alpha Corp. Development Pvt. Ltd. Page 5 of 9 By:NIRMLA TIWARI Signing Date:10.08.2022 13:53:51 to costs and it shall fix up the time schedule for future procedure. It is submitted that consequent to the recommendations made by the Law Commission of India, Section 29(A) has been introduced w.e.f 23rd October, 2015. Further amendments have been made in the Scheme of Section 29(A) in the year 2019 giving time limit for Arbitral Award. It is asserted that the real reason why the petitioner has chosen to file the petition under Section 14 & 15 of the Act rather than Section 29(A) is not to draw the attention of this Court's discretion which now envisages incremental interventions by the Court instead of straight away proceeding to terminate the mandate of the Arbitral Tribunal.
10. The respondent has submitted that the following additional facts may be considered:
(i) The petitioner has not deposited a single rupee towards the fee of the Arbitral Tribunal despite repeated directions and reminders by the learned Arbitral Tribunal;
(ii) Filing frivolous applications one after the other before the Arbitral Tribunal without paying the fee;
(iii) The petitioner itself has not been adhering to its own timelines and has been causing delay in the arbitral proceedings;
(iv) The petitioner had belatedly had filed application under Section 12 and 16 on trumpt up grounds which has no basis in law thereby wasting the time of the Arbitral Tribunal;
(v) The respondent alone has paid the fee of the Arbitral Tribunal on various dates; and.
(vi) The petitioner has even sought adjournment on frivolous grounds as has been recorded in the procedural order dated 11th September, 2018 by the Signature Not Verified Digitally Signed M/s Ketan Construction Co. vs. M/s Alpha Corp. Development Pvt. Ltd. Page 6 of 9 By:NIRMLA TIWARI Signing Date:10.08.2022 13:53:51 learned Arbitrator.
11. It is submitted that given the manner in which the petitioner has conducted himself in the proceedings, it is almost, as if, he harbours a personal grudge against the learned Arbitrator. It is also apparent that the delays before the Arbitral Tribunal are solely attributable to the actions of the petitioner. It is submitted that considering the advance stage of arbitral proceedings, terminating the mandate of Arbitral Tribunal at this stage would be benefiting the petitioner for its own wrongs and prejudicing the respondent who has been acting diligently in the arbitration proceedings. It is stated that in view of Section 29 (A)(viii) of the Act, the petition may be dismissed with exemplary costs. The respondent has placed reliance on Union of India Vs. M/s Tantia Constructions Limited SLP(C) No.112670/2020. It is submitted that the application is without merit and is liable to be dismissed.
12. Submissions heard.
13. The petitioner has sought the termination of the mandate of the Arbitral Tribunal essentially on the ground that the consent under Section 12(5) of the Act had not been obtained. As has been mentioned in the petition itself, the letter for obtaining the consent under Section 12(5) and 16 was moved by the petitioner to which the Arbitrator had given its reply and consent under Section 12 and 16 of the Act, 1996. It is further mentioned by the petitioner himself that since the respondent persisted in continuing with the learned Arbitrator who is illegible to be so appointed and suffered from disqualification stipulated under Section 12(5) and Seventh Schedule of the Act, the petition under Section 14(2) of the Act was filed by the petitioner, Signature Not Verified Digitally Signed M/s Ketan Construction Co. vs. M/s Alpha Corp. Development Pvt. Ltd. Page 7 of 9 By:NIRMLA TIWARI Signing Date:10.08.2022 13:53:51 though it was unconditionally withdrawn vide Order dated 19th July, 2019. It is also not in dispute that the petitioner has all throughout been participating in the proceedings and has submitted his claim and rejoinder and has even submitted the proposed issues which have been framed by the Arbitrator. The petitioner cannot be abusing the process by again filing another petition under Section 14 of the Act agitating that the respondent was not competent to appoint the Arbitrator in terms of Section 12 of the Act.
14. Hon'ble Supreme Court in Walter Bau AG Legal Successor vs. Municipal Corporation of Greater Mumbai and Anr. (2015) 3 SCC 800 had made a reference to Antrix Corporation Ltd. vs. Devas Multimedia Pvt. Ltd. (2014) 11 SCC 560 and Pricol Ltd. Vs. Johnson Controls Enterprise Ltd. (2015) 4 SCC 177 and had observed that after the appointment of the Arbitrator is made, remedy of the aggrieved party is not under Section 11(6), but the remedy lies elsewhere and under different provision of the Act (Section 12 & 13).
15. The other ground which has been agitated on behalf of the petitioner is that the Arbitrator is delaying the proceedings and has mandate has expired on 18th January, 2019. In so far as the delay in conducting the proceedings by the Arbitrator is concerned, it has been explained by the respondent in detail that it was the petitioner who has been frequently moving applications before the learned Arbitrator as well as in the Court and is intentionally trying to delay the proceedings. There is nothing to show that it was the Arbitrator who is in any manner delaying the proceedings in the arbitration.
16. The other aspect which has been agitated is that the term of the Signature Not Verified Digitally Signed M/s Ketan Construction Co. vs. M/s Alpha Corp. Development Pvt. Ltd. Page 8 of 9 By:NIRMLA TIWARI Signing Date:10.08.2022 13:53:51 learned Arbitrator has expired, but the same has been disputed by the respondent. However, in case the mandate of the Arbitrator has come to an end it is for either party to seek his extension under Section 29(A) of the Act, but that cannot be a ground to terminate the mandate under Section 14 and 15 of the Act.
17. There is not merit in the present application which is hereby dismissed.
NEENA BANSAL KRISHNA, J JULY 28, 2022 va Signature Not Verified Digitally Signed M/s Ketan Construction Co. vs. M/s Alpha Corp. Development Pvt. Ltd. Page 9 of 9 By:NIRMLA TIWARI Signing Date:10.08.2022 13:53:51