Delhi High Court
K.C. Chhibber vs Delhi Development Authority on 1 August, 1997
Equivalent citations: 68(1997)DLT169
Author: Lokeshwar Prasad
Bench: Lokeshwar Prasad
JUDGMENT Lokeshwar Prasad, J.
(1) The petitioner Shri K.C. Chhibber, in his capacity as sole proprietor of M/s.K.C. Chhibber & Company, has filed the present petition with the prayer that the vacancy caused due to the death of the Arbitrator Shri O.P. Mittal be supplied and a new Arbitrator be appointed in his place.
(2) The relevant history of the case, leading to the filing of the present petition, may briefly be stated thus : The petitioner was entrusted with the work of construction of 408 Mig Houses at Pitampura (Dakshini), Pocket A at the estimated cost of Rs. 82,31,808.00 by the Executive Engineer, Development Division-VI, jhandewalan. New Delhi vide letter dated 7.12.80 and an Agreement bearing No. 146/EE/DD-VI/80- 81-0000 was executed between the parties in relation thereto. The above said Agreement contained an arbitration clause (Clause 25) which contemplated reference of all disputes between the parties to the sole arbitration of the person to be appointed by the Engineer Member of the respondent-Delhi Development Authority (hereinafter referred to as 'the DDA') as the Arbitrator. It is stated that disputes/differences arose between the parties within the meaning of the Arbitration Agreement The petitioner invoked the arbitration clause and as no heed was paid to his request, the petitioner filed a petition under Section 20 of the Act before this Court. This Court vide order dated 31.10.93 passed in Suit No. 889-A/83=51 (1991) Dlt 581, entitled- Shri K.C. Chhihber v. Dua inter-alia directed that all disputes between the parties be referred to tlie sole arbitration of the person to be appointed by the Engineer Member of the respondent Dda within two months from the date of the order. It is averred that Shri S.P. Banwait, SSW-I of Dda was appointed as the sole Arbitrator by the Engineer member vide letter dated 26.12.83. Said Shri S.P. Banwait, it is stated, did not proceed with the case due to certain administrative reasons and ultimately resigned from the post of the Arbitrator vide letter dated 22.7.85 and in his place Shri O.P. Mittal, Chief Engineer (Retd.) Cpwd was appointed as a Sole Arbitrator. It is further stated that said Shri O.P. Mittal too vacated his office by reason of his death in April, 1991. The petitioner from May, 1991 to 1996 made repeated requests and also got served a notice dated the 18th March, 1996 on the respondent but no heed was paid to the above requests and notice of the petitioner. The petitioner in the present petition has prayed that as the respondent lies neglected to appoint an Arbitrator in terms of the arbitration agreement, the respondent has forfeited its right to appoint a new Arbitrator and that an independent technical Arbitrator be appointed in place of Shri O.P. Mittal who has expired in April, 1991.
(3) Notice of the petition was given to the respondent who has filed reply slating therein that the petition has become infructuous as the Engineer Member vide letter dated 12.7.96 has already appointed SE(Arbn.)-las the new Arbitrator to determine the disputes referred to the earlier Arbitrator. It is stated in the reply that in view of the above fact the present petition filed by the petitioner deserves to be dismissed.
(4) I have heard the learned Counsel for the parties at length and have also carefully gone through the documents/material on record. It was argued by the learned Counsel for the petitioner that as Shri O.P. Mittal, the Arbitrator appointed by the Engineer member of the respondent-DDA vacated his office by reason of his death in April, 1991 and the vacancy caused due to the death of said Shri O.P. Mittal has not been supplied and no appointment in his place has been made despite repeated requests & service of notice dated the 18th March, 1996 on the respondent Dda, the Court may appoint an Arbitrator in place of said Shri O.P. Mittal to determine the disputes between the parties in terms of the arbitration agreement. It was further submitted by him that keeping in view the nature of the disputes a technical person may be appointed as an Arbitrator. The learned Counsel for the respondent on the other hand submitted that since the Engineer member Dda has already appointed SE(Arbn.)-l as new Arbitrator in place of Shri O.P. Mittal, the petition virtually has become infructuous and, therefore, the same be dismissed as having been rendered infructuous.
(5) The admitted facts in the present case are that the petitioner was entrusted with the work of the construction of 408 Mig Houses at Pitampura (Dakshini), Pocket A at the estimated cost of Rs. 82,31,808.00 vide letter dated 7.12.80 and an Agreement bearing No. 146/EE/DD-VI/80-81-0000 was executed between the parties in relation thereto. It is also an admitted fact that disputes/differences arose between the parties which were referred to the sole arbitration of Shri S.P. Banwait, SSW-I, Dda in terms of the arbitration agreement. After the resignation of said Shri Banwait from the post of Arbitrator Shri O.P. Mittal, Chief Engineer(Retd.) Cpwd was appointed as Sole Arbitrates in place of said Shri Banwait. Said Shri O.P. Mittal too vacated his office by reason of his death in April, 1991. The vacancy caused as a result of the death of Shri O.P. Mittal was not filled in by the respondent-DDA. It is also not in dispute that the petitioner served a notice dated the 18th March, 1996 on the Engineer Member of the Dda requesting for the appointment of an Arbitrator in place of said Shri O.P. Mittal. Despite receipt of the above said notice no such appointment was made by the respondent till the filing of the petition. After the filing of the petition the respondent vide letter dated 12.7.96 has appointed SE(Arbn.)-I as a Sole Arbitrator but he too has vacated his office on 2.4.97 by reason of his transfer as Se Dwarka Zone thereby again leaving a vacancy in respect oi the above mentioned arbitration (6) As already stated, the learned Counsel for the petitioner, during the course of arguments submitted that since the respondent has not appointed anyone in place of late Shri O.P. Mittal as an Arbitrator to determine the disputes between the parties much after the expiry of the 15 clear days after the date of the receipt of the notice as provided under Sub-section (2) of Section 8 of the Act, an Arbitrator to determine the disputes between the parties be appointed by this Court in terms of the arbitration clause. In order to decide the above question it is necessary to read the material portion of Section 8 of the Act Sections 8(1)(b) & (2) of the Act are in these terms: "Power of Court to appoint Arbitrator or umpire.-(1) in any of the following cases - (b) if any appointed Arbitrator or Umpire neglects or refuses to act, or is incapable of acting, or dies, and the arbitration agreement does not show that it was intended that the vacancy should not be supplied and the parties or the Arbitrators, as the case may be, do not supply the vacancy; or Any party may serve the other parties or the Arbitrators, as the case may be, within a written notice to concur in the appointment or appointments or in supplying the vacancy. (2) If the appointment is not made within fifteen clear days titter the service of the said notice, the Court may, on the application of the party who gave the notice and after giving the other parties an opportunity of being heard, appoint an Arbitrator or Arbitrators or Umpire, as the case may be, who shall have like power to act in the reference and to make an award as if he or they had been appointed by consent of all parties."
(7) On a bare reading of the above provisions it is apparent that Section 8(1)(b) of the Act envisages cases where the proceedings are pending before the Arbitrator(s) and any of the Arbitrator(s) dies or becomes incapable of acting. In such an eventuality a party to the contract, containing an arbitration clause, is authorised to serve the other party with a written notice to concur in the appointment or appointments or supplying the vacancy and if within 15 clear days after the service of notice appointment is not made, the Court has the power, if moved by the party who gave the notice, to make such an appointment in which event the appointment shall be deemed to be by common consent. From the very nature of the above provisions, in my opinion, it must follow that the party who gave the notice for appointment of an Arbitrator has to be communicated, in case an appointment is made, with due haste that the notice has been complied with, otherwise the party giving notice would be justified in taking action under Sub-section (2) of Section 8 of the Act. It would, therefore, follow that the notice under Section 8(1) of the Act, if complied with, has to be communicated with utmost expedition to the notice giver. In ca.se the appointment is not made within the time indicated by law, the petitioner is well within his right to approach the Court and request the Court to make the appointment of an Arbitrator and the respondent in such an eventuality would have no Jud diction to make an appointment. Their Lordships of the Supreme Court in case Nunrtyal Co-op. Spinning Mills Ltd. v. K.V. Mohanrao have held that if no Arbitrator had been appointed in terms of contract within fifteen days from the date of the receipt of the notice, the Administrative Head had abdicated himself of the power to appoint Arbitrator under the contract and the Court gets jurisdiction to appoint an Arbitrator in place of the contract by operation of law. In another case State of West Bengal v. National Builders their Lordships of the Supreme Court while dealing with the scope of Section 5(1)(b) of the Act have held that the Courts' power to interfere and appoint an Arbitrator comes into operation if the Arbitrator refuses to act and the agreement does not show that the parties did not intend that the vacancy shall not be supplied. In P.G. Agencies v. union of India it was held by the Supreme Court ' that the language of the provision is not that the parties intended to supply the vacancy" but on the cither hand it is that "the parties did not intend to supply the vacancy". In other words if the agreement is silent as regards supplying the vacancy the law presumes that the parties intend to supply the vacancy. To take the case out of Section 8(1)(b) what is required is not the intention of the parties to supply the vacancy but their intention not to supply the vacancy. In Chander Bhan Harbhajan Lal v. State of Punjab [(1977) 1 SCC716] it was held that where a Committee of Arbitrators nominated by the Government becomes incapable of acting as such, it was within the competence of the Court to proceed to appoint a new Committee. Their Lordships of the Supreme Court in the above mentioned case State of West Bengal v. National Builders have held : "It, therefore, follows that in a case where the arbitration clause provides for appointment of a Sole Arbitrator and he had refused to act then the agreement clause stands exhausted. And it is for the Court to intervene and appoint another Arbitrator under Section 8(l)(b), 'if arbitration agreement does not show that it was intended that the vacancy shall not be supplied'.
(8) In the present case, as already stated, it is not in dispute that Shri O.P. Mittal. appointed in place of Shri S.P. Banwait, as Sole Arbitrator has vacated his office by reason of his death in April, 1991. It is also not in dispute that the petitioner served a notice dated the 18th March, 1996 on the Engineer Member, Dda requesting for appointment of a new Arbitrator in place of late Shri O.P. Mittal. The receipt of the above said notice is also not disputed. It is also not in dispute that till the date of the filing the present petition i.e. up to 6.5.96 no Arbitrator in place of said Shri O.P. Mittal was appointed by the respondent. Even the Arbitrator appointed vide letter dated 12.7.96 i.e. much after the filing of the present petition has also vacated his office on 2.4.97 as a result of his transfer as S.E. Dwarka Zone. In the presence of the above facts it cannot be stated that the respondent-DDA even after the receipt of the statutory notice dated the 18th March, 1996 acted with due haste and complied with the notice under Section 8(1) of the Act with utmost expedition. It is also not in dispute that the arbitration agreement does not show that it was intended that the vacancy should not be supplied.
(9) In view of the above discussion the present petition, filed by the petitioner has to be allowed.
(10) The next question requiring consideration by this Court is as to who should be appointed as an Arbitrator in place of late Shri O.P. Mittal. The learned Counsel for the petitioner submitted that since the dispute between the parties relate to technical matters, which can be solved and understood only by a qualified Engineer, a person with technical background be appointed as an Arbitrator. In my opinion, in the facts and circumstances of the present case, the above submission of the learned Counsel for the petitioner is not without substance. The disputes in the present case between the parties relate to matters which are technical in nature and, therefore, the same can be effectively understood and solved by a person who is a qualified Engineer. A Division Bench of Punjab High Court consisting of Khosia & Soni, JJ. in case Union of India v. M/s. New India Constructors, Delhi and Others while setting aside the appointment of an Advocate as an Arbitrator and directing that Shri C.P. Malik, Superintending Engineer be appointed as an Arbitrator observed : "A qualified Engineer is surely better than a mere Advocate in settling disputes involving technical matters. I therefore hold that the Court even if it had jurisdiction to decide this application under the Arbitration Act made an improper use of its discretion in not appointing Mr. C.P. Malik as the Arbitrator. I would set aside the order of the Court below and direct that Mr. C.P. Malik enter on the reference as an Arbitrator and perform his duties as such and make his award as expeditiously as possible."
(11) Similar view has been taken by the High Court of Patna in case Union of India v. D.P. Singh .1 am also in agreement with the view taken by the Division Bench of Punjab High Court and by the Patna High Court in the above mentioned cases.
(12) In the present case too the disputes between the parties relate to the construction of 408 Mig Houses at Pitampura (Dakshini), Pocket A at the estimated cost of Rs. 82,31,808.00 , which are highly technical in nature and can be effectively determined by a person technically qualified, preferably an Engineer who may be having the technical know-how connected with the disputes in question.
(13) In view of the position explained above the present petition, filed by the petitioner, is allowed and Shri C. Ramarao (Retd.), Director General of Works, Cpwd, R/o B-179, Lok Vihar, Pitampura, New Delhi is appointed as Sole Arbitrator in place of late Shri O.P. Mittal to determine the disputes between the parties in terms of the arbitration agreement. Said Shri C. Ramarao shall enter upon the reference forthwith and he shall start the proceedings from the stage at which the same were left by his Predecessor late Shri O.P. Mittal. The Arbitrator shall give reasons for the award. In the facts and circumstances of the case no order as to costs.