Bombay High Court
Simplex Infrastructures Limited vs The Union Of India (The Central Railway) on 20 July, 2015
Author: R.D. Dhanuka
Bench: R.D. Dhanuka
ppn 1 28.arbp-1715.14 (j).doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO.1715 OF 2014
Simplex Infrastructures Limited )
A public limited company incorporated )
Under the Companies Act,1956 and having )
their registered office at "Simplex house", )
27, Shakespeare Sarani, Kolkata -700 017. ) .. Petitioner
Vs.
The Union of India (The Central Railway) )
through their Chief Engineer (Const.)/south)
having his office at 6th floor, )
New Administrative office building,
D.N. Road, Mumbai CST, Mumbai 400 001)
)
.. Respondent
---
Mr.Kishore Jawle for the petitioner.
Mr.T.J. Pandian for the respondent.
---
CORAM : R.D. DHANUKA, J.
DATE : 20th July 2015
Judgment :
. By this petition filed under Sections 14 and 15 of the
Arbitration and Conciliation Act, 1996, the petitioner has prayed for an order of termination of the mandate of the present arbitral tribunal constituted under the letter of the Deputy Chief Engineer of the respondent dated 3rd May 2007 and further seeks an appointment of arbitrator/s in place and stead of the arbitral tribunal consisting of the three members. The petitioner has also alternatively prayed for an appointment of a retired Judge of this Court as the sole arbitrator in place and stead of the three arbitrators.
::: Uploaded on - 28/07/2015 ::: Downloaded on - 10/09/2015 19:52:42 :::ppn 2 28.arbp-1715.14 (j).doc
2. It is not in dispute that the work was awarded on 28 th September 2000. The petitioner had submitted their bill for consolidated claims on 18th July 2005. The dispute arose between the parties on 6 th December 2005. On 3 rd May 2007, the Deputy Chief Engineer of the respondent had constituted the arbitral tribunal under the provisions of the contract entered into between the parties. On 14th May 2009, the Deputy Chief Engineer of the respondent replaced the nominee co- arbitrator of the respondent and appointed a new co-arbitrator. On 4 th October 2007, the petitioner filed their Statement of Claims before the learned arbitrator. On 24th November 2008, the respondent filed their Statement of Defence and Counter-claims. The petitioner filed their rejoinder on 4th December 2009.
3. On 18th June 2010, the petitioner requested the arbitral tribunal to fix a preliminary date of hearing in the arbitral proceedings.
On 12th January 2012 once again the petitioner requested the arbitral tribunal to fix a preliminary date of hearing. The petitioner vide their letter dated 20th February 2012 to the General Manager of the respondent pointed out the delay in the commencement of the arbitral proceedings and called upon him to initiate immediate steps to ensure that the arbitral proceedings were disposed of and commenced expeditiously. Since there was no response to the said letter, the petitioner once again requested the General Manager of the respondent vide their letter dated 12 th May 2012 to take steps to commence the arbitral proceedings. On 18 th May 2012, the General Manager of the respondent also requested the arbitral tribunal to commence the arbitral proceedings. On 25th February 2013, the arbitral tribunal intimated the parties that the arbitral tribunal had fixed the preliminary date of hearing on 27th February 2013.
::: Uploaded on - 28/07/2015 ::: Downloaded on - 10/09/2015 19:52:42 :::ppn 3 28.arbp-1715.14 (j).doc
4. On 27th February 2013, the petitioner made a preliminary presentation before the arbitral tribunal. On 5 th March 2013, the petitioner was informed by the arbitral tribunal that further presentation would be made during the course of the next date of hearing. The arbitral tribunal, however, did not fix any further date of hearing.
5. The petitioner accordingly addressed a letter dated 25th June 2013 to the General Manager of the respondent calling upon him to ensure that the proceedings are commenced within 30 days from the date of receipt of the said letter failing which the petitioner would be constrained to file a petition under Sections 14 and 15 of the Arbitration Act and would apply for a declaration that the mandate of the arbitral tribunal is terminated and appointment of new arbitrator/s. There is no response to the said notice. The petitioner accordingly filed this petition under Sections 14 and 15 of the Arbitration Act for termination of the mandate of the arbitral tribunal and for appointment of new arbitrator/s.
6. Mr.Jawle, learned counsel for the petitioner invited my attention to various correspondence annexed to the petition and submits that the dispute had arisen between the parties in the year 2005 and till 2015, there was no commencement of the arbitration proceedings except a preliminary meeting which was held on 27th February 2013. He submits that the statement of claim was already filed as far back as 4 th October 2007. Written statement and counter-claim were filed on 24 th November 2008. He submits that since the arbitral tribunal has not proceeded with the proceedings expeditiously and is unable to proceed without undue delay, the mandate of the arbitral tribunal stands terminated.
::: Uploaded on - 28/07/2015 ::: Downloaded on - 10/09/2015 19:52:42 :::ppn 4 28.arbp-1715.14 (j).doc
7. Mr. Pandian, learned counsel for the respondent does not dispute that the pleadings were already filed as far back as 24 th November 2008. He submits that the General Manager of the respondent had requested the arbitral tribunal to commence the arbitration proceedings on 18th May 2012. He submits that the presiding arbitrator was transferred to Gorakhpur and the appointing authority is likely to appoint a new arbitrator in his place. He submits that this Court shall give a last opportunity to the arbitral tribunal to complete the arbitration proceedings. He does not dispute that as on date, even the arbitral tribunal of three members is not in place. The presiding arbitrator has also not been appointed as presiding arbitrator who is stated to be transferred to Gorakhpur.
8. In my view, since the arbitral tribunal has not proceeded with the arbitration proceedings expeditiously and without undue delay though the dispute had arisen in the year 2005, no further time can be granted to the same arbitral tribunal to continue the proceedings at this stage. The petitioner has thus made out a case for termination of the mandate of the arbitral tribunal under Sections 14 and 15 of the Arbitration Act and it is ordered accordingly.
9. In so far as the request of the petitioner to appoint a retired Judge of this Court as sole arbitrator is concerned, in my view, since the arbitral tribunal appointed by the respondent has not proceeded with the arbitration proceedings for last more than eight years and the respondent has not appointed any new presiding arbitrator though the presiding arbitrator is transferred, the respondent has lost their right to appoint any arbitrator in accordance with the arbitration agreement. In my view, the ::: Uploaded on - 28/07/2015 ::: Downloaded on - 10/09/2015 19:52:42 ::: ppn 5 28.arbp-1715.14 (j).doc petitioner can thus apply for appointment of an independent arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996.
10. Supreme Court in case of North Eastern Railway vs. Tripple Engineering Works, AIR 2014 SC 3506 has after adverting to the judgment of Supreme Court in case of Union of India vs. Singh Builders Syndicate, (2009) 4 SCC 523, judgment of Supreme Court in case of Union of India vs.Bharat Battery Manufacturing Co. (P) Ltd., (2007) 7 SCC 684, judgment of Supreme Court in case of Indian Oil Corporation Limited and Ors. v. Raja Transport Private Limited (2009) 8 SCC 520 has held that even if the arbitration agreement was to specifically provide for any particular qualification of an arbitrator, the same would not denude power of the court acting under Section 11(6), in appropriate case to depart therefrom. It is held that in case of Union of India vs. Singh Builders Syndicate (supra) pendency of arbitration proceedings for over a decade was found by Supreme Court to be mockery of the process.
11. After considering gross delay even in commencing the arbitral proceedings to resolve the disputes and differences between the parties, it is held by the Supreme Court that the power of the court under the Arbitration and Conciliation Act has to be exercised to effectuate the remedy provided thereunder and to facilitate the mechanism contemplated therein. It is held that 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 the court. Supreme Court in the said judgment upheld the appeal filed by the North Eastern Railway (supra) impugning the order passed by the Patna High ::: Uploaded on - 28/07/2015 ::: Downloaded on - 10/09/2015 19:52:42 ::: ppn 6 28.arbp-1715.14 (j).doc Court by which the former Chief Justice of Sikkim High Court had been appointed to act as an arbitrator to resolve the disputes and differences between the parties i.e. North Eastern Railway and the contractor though the arbitration agreement in the said contract also provided for appointment of an arbitrator from the Panel of the North Eastern Railway.
12. In my view the facts of this case are also gross. The dispute had arisen in the month of December 2005. The arbitral tribunal had already been appointed in the year 2007. Till date, there is no actual commencement of the hearing though about a decade is over. In my view, the judgment of Supreme Court in case of North Eastern Railway (supra) squarely applies to the facts of this case.
13. In my view, if the submission of the learned counsel for the respondent to give one more opportunity to the respondent to appoint another arbitrator in place of the presiding arbitrator and to allow the tribunal to proceed with the matter if accepted, it would be mockery of process in the facts of this case. The whole purpose and object of the disposal of the arbitral proceedings expeditiously would be frustrated. I am thus not inclined to accept this submission on the part of the learned counsel for the respondent to permit the respondent to appoint presiding arbitrator at this stage.
14. I therefore pass the following order :-
a) Shri Justice S.K. Shah, former Judge of this Court is appointed as the sole arbitrator. The learned arbitrator shall proceed with the matter from the stage at which they are today. Both the parties ::: Uploaded on - 28/07/2015 ::: Downloaded on - 10/09/2015 19:52:42 ::: ppn 7 28.arbp-1715.14 (j).doc have agreed to co-operate with each other and with the learned arbitrator in the disposal of the the arbitral proceedings expeditiously.
b) Learned arbitrator may make an endeavour to dispose of arbitral proceedings within six months from the date of first meeting.
c) Arbitration petition is disposed of in aforesaid terms.
d) There shall be no order as to costs.
R.D. DHANUKA, J.
::: Uploaded on - 28/07/2015 ::: Downloaded on - 10/09/2015 19:52:42 :::