Madras High Court
M/S.Patel Construction Co vs Chief Engineer on 9 January, 2015
Author: Sanjay Kishan Kaul
Bench: Sanjay Kishan Kaul
In the High Court of Judicature at Madras Dated : 09.01.2015 Coram : The Hon'ble Mr.Sanjay Kishan Kaul, Chief Justice O.P.No.492 of 2014 M/s.Patel Construction Co. Rep. by its Proprietor, Pankaj Patel. .. Petitioner -vs- 1.Chief Engineer, Chennai Zone, Island Grounds, Chennai. 2.Garrison Engineer, Red Fields, Coimbatore. 3.Engineer-in-Chief, Military Engineer Services, Integrated HQ of MOD (Army) Kashmir House, Rajaji Marg, New Delhi. .. Respondents Petition filed under Section 11 of the Arbitration and Conciliation Act, 1996, to appoint a Sole Arbitrator arising out General Conditions of Contracts for Lumpsum Contracts (I.A.F.W-2159), Term Contracts for Artificers' Work (I.A.F.W.-1821) and Measurement Contracts (I.A.Fs.W-1779 & 1779-A) Order of Conditions as enlisted in Condition No.70 in I.A.F.W.-2249. For Petitioner : Mr.S.Natana Rajan For Respondent : Mr.N.Ramesh * * * * * O R D E R
The Contract inter se the parties undisputedly contained Arbitration Clause 70 of the General Conditions of Contract, which reads as under:
70.Arbitration. -- All disputes, between the parties to the Contract (other than those for which the decision of the C.W.E. or any other person is by the Contract expressed to be final and binding) shall, after written notice by either party to the Contract to the other of them, be referred to the sole arbitration of 'serving officer having degree in Engineering or equivalent or having passed final/direct final examination of sub division-II of institution of Surveyor (India), recognized by the Govt. of India' to be appointed by the authority mentioned in the tender documents.
Unless both parties agree in writing such reference shall not take place until after the completion or alleged completion of the Works or termination or determination of the Contract under Condition Nos.55, 56 and 57 hereof.
Provided that in the event of abandonment of the Works or cancellation of the Contract under Condition Nos.52, 53 or 54 hereof, such reference shall not take place until alternative arrangements have been finalized by the Government to get the Works completed by or through any other Contractor or Contractors or Agency or Agencies.''
2.The contract in question was entered into between the petitioner / Contractor and the respondents for replacement of existing out lived CI water line with DI pipes, with acceptance on 15.06.2011. The dispute really is that while on one hand the petitioner pleads that he has completed the work and sought completion certificate, it is the say of the respondents that the work is actually not completed, as the petitioner has failed to conduct a proper test as stipulated, which constitutes 96.36 % of the total scope of the work and over 90% of the payment has been made. This dispute could not be resolved, resulting in the petitioner invoking the arbitration clause vide letter dated 21.03.2014 and requesting the appointing authority to appoint an Arbitrator.
3.The respondents, however, took the stand that the request for arbitration was premature, vide their reply dated 02.05.2014 on the aforesaid account.
4.The petitioner, thereafter, filed the present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the said Act').
5.In so far as the merits of the controversy is concerned, the same is not liable to be examined by this Court. Suffice to say that there is a written agreement inter se the parties containing arbitration clause and disputes have arisen inter se the parties. The only question to be examined is the plea of the respondents that the occasion to appoint the Arbitrator had not arisen.
6.If Clause 70 is read, it is obvious that reference is not to take place until ''after the completion or alleged completion of work or termination or determination of contract under Condition Nos.55, 56 and 57 hereof ''. The present case is not one of termination or determination of the contract. The arbitration clause envisages both the situations, i.e. completion and alleged completion. Undoubtedly, the petitioner alleges completion, though the respondents dispute the same. Thus, I am unable to persuade myself to agree with the submission of the learned counsel for the respondent that in view of the stand of the respondents, the matter cannot be referred to arbitration. In fact, the respondents in para 8 of their counter-affidavit have themselves alleged that the petitioner has been repeatedly agitating for issuance of completion certificate. As to what really transpires on the merits of the case is to be determined before the Arbitrator.
7.Learned counsel for the respondents relies upon the orders of the learned Single Judge of the Calcutta High Court in Singhania Enterprises vs. The Chief Engineer, Military Engineering Services, decided on 18.06.2014. I, however, fail to appreciate how this case advances the plea of the respondents as, after referring to the different conditions stipulated in Clause 70, it has been noticed that in the facts of that case, it was not in dispute that the work under the agreement had not been completed. In the present case, there is actually a controversy whether the work has or has not been completed and the petitioner alleges completion.
8.The next question arises from the plea of the learned counsel for the respondents that in the factual position of the present case, still the designated authority should be permitted to appoint an Arbitrator, who should be a Serving Officer of the respondent. In this behalf, the learned counsel has referred to the judgment of the learned Single Judge of the Delhi High court in R.K.Pahwa vs. Union of India (CDJ 2001 DHC 764). However, a perusal of para 6 of that case shows that the reason permeating is that the respondents were not sitting tight over the matter nor '' had shown disinclination for appointment of an Arbitrator''. The cause for invocation of Clause 70 had not arisen. In the present case, I have already found that the occasion for invocation of the arbitration clause had arisen and there was, in writing, disinclination on part of the respondents to appoint the Arbitrator and such a position has continued right even in the present proceedings. Thus, this plea is to be rejected and the respondents had lost their right to appoint the Arbitrator in view of the judicial pronouncements in Datar Switchgears Ltd. vs. Tata Finance Ltd., 2000 (8) SCC 151, followed subsequently in National Insurance Co. Ltd. vs. Mastan, 2006 (2) SCC 641, as also by a Division Bench of this Court in The General Manager (Telecom) Madurai Secondary Switching Area, Department of Telecommunication vs. Sesa Seat Information Systems Ltd., 2005 4 MLJ 210.
9.The last submission of the learned counsel for the respondents is that in the aforesaid position, at least a technical person should be appointed as Arbitrator, which is what arbitration clause envisaged. To this extent, I am in agreement with the submission of learned counsel for the respondents.
10.A List of Panel Arbitrators is produced by learned counsel for the petitioner and both the learned counsel for the parties agree to appoint Mr.Sudesh Kumar Gupta, a retired Chief Engineer (QS & C) as the Sole Arbitrator to enter upon reference and adjudicate the disputes inter se the parties.
11.In view of aforesaid and as proposed by the learned counsel for parties by consent, I, thus, appoint Mr.Sudesh Kumar Gupta, a retired Chief Engineer (QS & C) Standing Panel of Arbitrators (Pune), CWE Pune Complex, General Cariappa Marg, Pune Camp, Pune 411 001, as the Sole Arbitrator, to enter upon the reference and after issuing notice to the parties and upon hearing them, pass an award as expeditiously as possible, preferably within a period of six months from the date of receipt of this order. The learned Arbitrator is at liberty to fix the remuneration and other incidental expenses, which shall be borne equally by both the parties.
12.Accordingly, the original petition is allowed, leaving the parties to bear their own costs.
(S.K.K., CJ.) 09.01.2015 sra The Hon'ble Chief Justice (sra) O.P.No.492 of 2014 09.01.2015