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Punjab-Haryana High Court

M/S R.K Jain Infra Project Pvt Ltd vs Haryana State Road & Bridges ... on 26 February, 2016

                                  IN THE HIGH COURT OF PUNJAB AND HARYANA AT
                                                  CHANDIGARH

                                                                        ARB-237-2015 (O&M)
                                                             Date of decision:- 26.02.2016

                                M/s R.K. Jain Infra Project Pvt. Ltd.
                                                                               ...Petitioner
                                                   Versus

                                Haryana State Roads & Bridges Development Corporation
                                Ltd. and others
                                                                       ...Respondents

            CORAM: HON'BLE MR. JUSTICE S.J. VAZIFDAR, ACTING CHIEF JUSTICE

            Present:- Mr. Deepak Saini, Advocate,
                      for the petitioner.

                                  Mr. G.S. Rana, Advocate,
                                  and Mr. P.S. Rana, Advocate,
                                  for respondents No. 1 to 5.

                       Mr. Raghujeet Singh Madan, Advocate,
                       and Mr. Umesh Aggarwal, Advocate,
                       for respondent No. 6.
                                  * * * *
            S.J. VAZIFDAR, A.C.J. (ORAL)

This is a petition under Section 11 of the Arbitration and Conciliation Act, 1996 for the appointment of an arbitrator.

2. The petitioner and respondent No. 1 had entered into an agreement dated 04.07.2014. The other respondents are not parties to the agreement. This order is, therefore, restricted to the petitioner and respondent No. 1. The agreement entitled the petitioner to collect toll. The agreement was terminated. The petitioner had filed CWP-26393-2014 which was disposed of by an order and judgement dated 23.12.2014 of a Division Bench of this Court to which I was a party. The order clarified that the rights and contentions of the parties were open including a claim for damages. It also kept open the mode of recovery, namely, whether by arbitration or otherwise.

3. The petitioner thereafter invoked the arbitration AMODH SHARMAclause on 13.10.2015. Respondent No. 1 by its reply dated 2016.02.27 14:32 I attest to the accuracy and authenticity of this document chandigarh ARB-237-2015 (O&M) 2 23.10.2015 stated that the petitioner had not exhausted the remedy available under Clause 38 of the agreement before seeking an appointment of the arbitrator.

4. Clauses 38 and 39 of the agreement read as under:-

"38. Except where otherwise provided or specified in this agreement and subject also to such powers as may be delegated by the Managing Director, HSRDC to the Executive Engineer (PWD B&R) concerned or anyone else for the time being in charge of the said fee collection, on all questions and matter whatsoever arising out of or in relation to or in connection with this Agreement or as to the interpretation of any of its conditions whether during the currency of this Agreement or at any time thereafter, shall be final and binding on the Entrepreneur/Agent.

Provided that, in the event that the Entrepreneur/Agent disagrees with any decision of the Executive Engineer concerned or person authorized by Managing Director, he may send a written communication to the Executive Engineer concerned or person authorized by Managing Director indicating the issues.

39. In the event the Entrepreneur/Agent disagreeing, with the decision mentioned in the provision of above, he may request the Managing Director, HSRDC, for appointment of an Arbitrator for adjudication of the dispute. On receipt of request from the Entrepreneur/Agent for appointment of Arbitrator, Managing Director, HSRDC will appoint an Arbitrator for adjudication of the dispute. The arbitrator so appointed shall conduct the arbitration proceedings in accordance with the provision of the contract agreement. Fee of the Arbitrator shall be paid by the party who will seek the arbitration."

5. I will for the purpose of this judgement presume that following the procedure under clause 38 is a condition precedent for invoking the arbitration agreement under clause 39 although that is doubtful. However, clause 38 is vague. The opening part, without the proviso, comprises of only one sentence. The sentence is divided into two parts. It refers to the rights of the Managing Director to delegate the powers to the Executive Engineer. It also provides that on all questions and matters arising out of or in relation to or in connection with the agreement or as to the interpretation of any of its conditions shall be final and binding on the entrepreneur/agent. The opening part of clause 38, however, does not indicate as to who is to take the decision. It merely provides that the Managing Director shall be entitled to delegate such powers. Absent anything else, this would imply that the Managing Director has the power to take the decision on the questions and matters mentioned therein unless he delegates this power.

6. There is, however, an inherent contradiction by virtue of the proviso to clause 38. It provides that if the entrepreneur/agent disagrees with any decision of the Executive Engineer concerned or person authorized by the Managing Director, he may send a written communication to the Executive Engineer or person authorized by the Managing Director indicating the issues. This would indicate that it is primarily the Executive Engineer who is to take the decision. This in fact is the stand of the respondents. However, the main part of clause 38 does not indicate the same. Moreover, the proviso merely provides that in the event of the entrepreneur/agent disagreeing with the decision of the Executive Engineer or person authorized by the Managing Director, he may send a written communication to the Executive Engineer concerned or the person authorized by the Managing Director indicating the issues. The proviso does not indicate what such officers are to do upon receiving the communication indicating the issues.

7. Admittedly, the Managing Director has not appointed anybody as his delegate for the purpose of clause 38. The contracts are, therefore, left in a state of wonderment as to who is to take this decision. In these circumstances, the petitioner cannot be faulted for having invoked clause 39 directly. Even respondent No. 1's letter dated 23.10.2015 in reply to the petitioner's letter dated 13.10.2015 invoking the arbitration clause does not clarify as to how the petitioner had not exhausted the remedy available under clause 38. The letter does not indicate as to which of the officers of the respondents the petitioner ought to have approached under clause 38.

8. As mentioned earlier, the petitioner invoked the arbitration clause by its letter dated 13.10.2015 and filed the arbitration petition on 03.12.2015. The respondents have not appointed an arbitrator to date. The respondents have, therefore, forfeited their right to appoint the arbitrator under clause 39. The purported appointment of an arbitrator after the filing of the petition, therefore, makes no difference.

9. The petition is disposed of by appointing Mr. R.K. Sharma, a retired District and Sessions Judge, H. No. 1717, DLF, Phase IV, Gurgaon, as the sole arbitrator.

(S.J. VAZIFDAR) ACTING CHIEF JUSTICE 26.02.2016 Amodh AMODH SHARMA 2016.02.27 14:32 I attest to the accuracy and authenticity of this document chandigarh