Madras High Court
The Military Engineer Services vs The Surface Tech (India) Pvt. Ltd on 18 February, 2020
Author: M.Sundar
Bench: M.Sundar
O.P.No.854 of 2019
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 18.02.2020
Coram
THE HONOURABLE MR. JUSTICE M.SUNDAR
O.P.No.854 of 2019
The Military Engineer Services
Chief Engineer (AF) Bengaluru
Rep. By its Authorized officer
Sri.B.Balaiah
Garrison Engineer (AF)
Having Office at
Air Force Station
Pudukkottai Road
Thanjavur – 613 005 ... Petitioner
vs.
The Surface Tech (India) Pvt. Ltd.,
Rep. By its Managing Director
A.K.Thakur
Having Office at
No.25, Shreemanta Market
AT Road, Guwahati – 781 001 ... Respondent
Original Petition filed under Section 11 of the Arbitration and
Conciliation Act, 1996, to appoint an arbitrator and refer the dispute as per
the terms of the condition 70 of General Conditions of Contracts (IAFW-
2249-1989 Print) to the said arbitrator and to pay the cost of this petition.
For Petitioner : Mr.Venkatswamy Babu
http://www.judis.nic.in
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O.P.No.854 of 2019
ORDER
Instant 'Original Petition' ('OP' for the sake of brevity) is under Section 11 of 'The Arbitration and Conciliation Act, 1996 (Act 26 of 1996)', which shall hereinafter be referred to as 'A and C Act' for the sake of brevity and the prayer is one seeking appointment of an arbitrator qua Clause 70 of General Conditions of Contract (GCC) pertaining to a contract of provision of compound wall and street lights in technical and domestic area in Thanjavur and the contract number is CA No: CE (AF)/BAN/48 of 2010-2011.
2. Clause 70 of GCC reads as follows:
' 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 an Engineer Officer 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 Work 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 http://www.judis.nic.in 2/7 O.P.No.854 of 2019 Works completed by or through any other Contractor or contractors or Agency or Agencies.
Provided always that commencement or continuance of any arbitration proceeding hereunder or otherwise shall not in any manner militate against the Government's right of recovery from the contractor as provided in Condition 67 thereof. If the Arbitrator so appointed resigns his appointment or vacates his office or is unable or unwilling to act due to any reason whatsoever, the authority appointing him may appoint a new Arbitrator to act in his place.
The Arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties, asking them to submit to him their statement of the case and pleadings in defence.
The Arbitrator may proceed with the arbitration, exparte, if either party, inspite of a notice from the Arbitrator faiils to take part in the proceedings.
The Arbitrator may, from time to time, with the consent of the parties, enlarge the time upto but not exceeding one year from the date of his entering on the reference, for making and publishing the award.
The Arbitrator shall give his award within a period of six months from the date of his entering on the reference or within the extended time as the case be on all matters referred to him and shall indicate his findings, along with sums awarded, separately on each individual item of dispute.
The venue of Arbitration shall be such place or places as may be fixed by the Arbitrator in his sole discretion.
The award of the Arbitrator shall be final and binding on both parties to the Contract.' http://www.judis.nic.in 3/7 O.P.No.854 of 2019
3. In the light of Clause 70 of GCC, obviously an Engineer Officer has to be appointed as an arbitrator.
4. Names of Engineer Officers have been placed before this Court.
5. Be that as it may, it is necessary to record that the sole respondent in the instant OP has been duly served, this Court is informed that sole respondent has not entered appearance through a counsel. Name of the sole respondent is shown in the cause list and name of the sole respondent called out aloud thrice in the Court and adjoining corridors. No response. In other words, respondent has not come forward to oppose this application.
6. Notwithstanding the above said trajectory, owing to the Duro Felguera and Mayavati Trading principles, this Court embarks upon the exercise of examining the existence of an arbitration agreement between the parties and arriving at a prima facie satisfaction about the existence of arbitration agreement between the parties. A perusal of clause 70 of GCC and above mentioned contract, which refers to GCC, it comes to light that there is an arbitration agreement in existence between the parties, being an arbitration agreement within the meaning of Section 2(1)(b) read with Section 7 of A and C Act. To be noted, Clause 70 of GCC has already been http://www.judis.nic.in 4/7 O.P.No.854 of 2019 extracted and reproduced supra. With regard to Duro Felguera principle, the same has been laid down by Hon'ble Supreme Court vide Duro Felguera S.A. vs. Gangavaram Port Limited reported in (2017) 9 SCC 729. Relevant paragraphs in Duro Felguera case law are Paragraphs 47 and 59, which read as follows:
'47. What is the effects of the change introduced by the Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter referred to as 'the 2015 Amendment' ) with particular reference to Section 11(6) and the newly added Sectin 11(6-A) of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as “the 1996 Act”) is the crucial question arising for consideration in this case.' '59. The scope of the power under Section 11 (6) of the 1996 Act was considerably wide in view of the decisions in SBP and Co. (supra) and Boghara Polyfab (supra). This position continued till the amendment brought about in 2015. After the amendment, all that the Courts need to see is whether an arbitration agreement exists -
nothing more, nothing less. The legislative policy and purpose is essentially to minimize the Court’s intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11 (6A) ought to be respected. ' (underlining made by this Court to supply emphasis and highlight)
7. Mayavati Trading principle has been laid down by Hon'ble Supreme Court vide Mayavati Trading Pvt. Ltd., Vs. Pradyuat Deb Burman reported in (2019) 8 SCC 714). Relevant paragraph in Mayavati Trading case law is Paragraph 10 and the same reads as follows:
''10. This being the position, it is clear that the law prior to http://www.judis.nic.in 5/7 O.P.No.854 of 2019 the 2015 Amendment that has been laid down by this Court, which would have included going into whether accord and satisfaction has taken place, has now been legislatively overruled. This being the position, it is difficult to agree with the reasoning contained in the aforesaid judgments, as Section 11(6-A) is confined to the examination of the existence of an arbitration agreement and is to be understood in the narrow sense as has been laid down in the judgment in Duro Felguera SA.' (underlining made by this Court to supply emphasis and highlight)
8. As this Court is prima facie satisfied about the existence of arbitration agreement between the parties and the respondent has not chosen to come before this Court to oppose this petition, though notice has been served, this Court proceeds to appoint one of the Engineer Officers of the petitioner as arbitrator.
9. Shri.Baljit Singh, ADG (Arbitrator), SPA, Chandigarh is appointed as sole arbitrator. Sole arbitrator is requested to enter upon reference qua arbitral disputes that have arisen between the parties regarding contract, adjudicate upon the same and pass an award in accordance with A & C Act.
Instant OP disposed of on above terms. No costs.
18.02.2020 Speaking order: Yes/No Index: Yes/No gpa http://www.judis.nic.in 6/7 O.P.No.854 of 2019 M.SUNDAR.J., gpa O.P.No.854 of 2019 18.02.2020 http://www.judis.nic.in 7/7