Delhi High Court
D.S. Gupta Contracts Pvt. Ltd., New ... vs Unison Hotels Ltd., New Delhi And The ... on 21 May, 2002
Author: Madan B. Lokur
Bench: Madan B. Lokur
JUDGMENT Madan B. Lokur, J.
1. The Petitioner was awarded a contract by the Respondents for executing plumbing works for the Grand Hyatt Hotel at Vasant Kunj. The contract was awarded some time in September, 1996. The execution of the contract was delayed for a considerable period of time and ultimately, according to the Respondents, the project was abandoned.
2. Be that as it may, on 14th October, 1999, the Petitioner wrote to the Respondents giving the reasons for delay in execution of work and in completion of the project. It was also mentioned that about Rs.80 lakhs of the Petitioner's dues are blocked for release by the Respondents, the details of which were mentioned in the letter. The Petitioner hoped that the Respondents would release the due payments immediately and also take necessary action for speedy completion of the work so that further losses can be saved.
3. The aforesaid letter was followed up by aletter dated 20th October, 1999 wherein the Petitioner objected to the Respondents stopping the Petitioner's workmen from entering the site and executing the work. A request was made to the Respondents to get the joint measurements taken by 25th October, 1999 failing which the Petitioner would be compelled to approach a Court of law for the appointment of a local commissioner for recording joint measurements and to appoint an arbitrator to adjudicate the disputes between the parties.
4. It seems that no satisfactory response was obtained by the Petitioner and consequently on 28th October, 1999 the Petitioner filed OMP No.311/1999 in this Court under the provisions of Section 9 of the Arbitration and Conciliation Act,1996 (for short the Act). One of the reliefs claimed by the Petitioner was for the appointment of a local commissioner to take joint measurements of the work done in the project.
5. OMPNo.311/1999 came to be decided by a learned Single Judge of this Court on 19th April, 2000. The following order was passed in that case:-
"The learned counsel for the petitioner states that the request for appointment of an Arbitrator shall be made within a week from today as per Arbitration Clause 16.3. Upon the receipt of such request, the respondent to appoint an Arbitrator within six weeks thereafter.
Both the parties are granted liberty to file the objections to Local Commissioner's Report.
Petition is accordingly disposed of."
6. It appears that there is a typing error in referring to the arbitration clause as being 16.3.It is actually 16.2. The arbitration clause 16.2 reads as follows:-
"16.2 In the event of any dispute or difference between the parties hereto as to the construction or operation of this contract, or the respective rights and liabilities of the parties on any matter in question, dispute or difference on certificate to which the CONTRACtor may claim to be entitled, or if the owner/ EMPLOYER fails to make a decision within reasonable time, then and in any such case, but except in any of the Excepted Matters referred to elsewhere in these General Conditions, the CONTRACtor after 90 days of his presenting his final claim on the disputed matters, may demand in writing that the dispute or difference be referred to arbitration. Such in question, dispute or difference, and only such dispute or difference other than Excepted Matters of which the demand has been made and no other dispute or difference shall be referred to the arbitration of an officer of the owner/EMPLOYER to be nominated by the Managing Director at the relevant then by the Board of Directors of the owner/EMPLOYER and the provision of the Indian Arbitration Act 1940, for the time being in force, shall apply to such arbitration."
7. Notwithstanding the time limit placed by the learned Single Judge on the Petitioner for making a request for the appointment of an Arbitrator, the Petitioner exceeded that limit and by a letter dated 20th May, 2000 requested the Respondents to appoint an Arbitrator to adjudicate the claims to be filed before the learned Arbitrator. The Respondents replied on 25th May, 2000 that the Petitioner had exceeded the time set by the learned Judge. It was further stated that the Petitioner is deemed to have waived the earlier correspondence on the subject including the letter dated 20th October, 1999. It was finally stated that without prejudice, the Petitioner may comply with the requirements of Clause 16 of the agreement so as to enable the appointment of an Arbitrator.
8. On 20th June, 2000, the Petitioner replied to the Respondents that they (the Respondents) were trying to delay the matter because a large sum of money due to the Petitioner had been withheld by the Respondents. A request was again made to the Respondents to appoint an Arbitrator for adjudication of the claims which were enclosed along with the letter dated 20th June, 2000.
9. On or about 11th August, 2000, the Petitioner filed AA No.190/2000 which was a petition under Section 11(6) of the Act to appoint an Arbitrator by intervention of the Court. Notice was issued in this case but served on the Respondents only on 2nd September, 2000.
10. In the meanwhile, without the Respondents having any knowledge of AA No.190/2000 having been filed by the Petitioner, they appointed Sanjeev Garg, Corporate Purchase Manager of Respondent No.1 as the Sole Arbitrator to arbitrate all the disputes between the Petitioner and the Respondents. Intimation to this effect was sent by the Respondents to the Petitioner by a letter dated 25th August, 2000.
11. On 30th August, 2000, the learned Arbitrator entered upon reference and intimated both the parties to be present before him on 5th September, 2000.
12. Both the Petitioner and the Respondents received the notice sent by the learned Arbitrator and in fact appeared before him on 5th September, 2000. The proceedings before the learned Arbitrator on 5th September, 2000 read as follows:-
"Pursuant to the notice no. UHL:DSG:2K dated 30thAugust, 2000 issued by the undersigned to the Claimant as well as Defendant, above named representatives of both the parties are present.
The claimant submitted its claim to the undersigned for arbitration.
Onset of the claim of the claimant is given to the defendant for acceptance and/or denial. The defendant asked for three weeks' time to study the claim and file the reply, which is quite reasonable and granted.
Both the parties advised to furnish in writing the names along with the attested signatures of their authorized representatives who would be attending the arbitration on a regular basis.
Adjourned to Tuesday, 26th September, 2000 for receiving thereplyfrom defendant.
Copy of recorded proceedings given by hand to the Claimant and Defendant."
13. A perusal of the proceedings show that even though notice of AA No.190/2000had been served upon the Respondents, no mention of this was made to the learned Arbitrator by the Respondents. Similarly, no mention was made by the Petitioner to the learned Arbitrator about the fact that it had approached the Court for the appointment of an Arbitrator. In other words, both the parties appear to have been silent before the learned Arbitrator with regard to the tendency of the arbitration case in this Court.
14. On 23rd September, 2000, the Respondents wrote to the learned Arbitrator (with a copy to the Petitioner) for extension of time for preparing a reply to the claim submitted by the Petitioner and also for submitting a counter-claim.
15. On 24th September, 2000, the learned Arbitrator resigned from the services of Respondent No.1 and, therefore, wrote to the parties that it would not be possible for him to continue as an Arbitrator and he submitted his resignation as an Arbitrator.
16. On 25th September, 2000, the Petitioner wrote to the learned Arbitrator, apparently without knowing that he had already resigned, stating that since the Respondents have requested for time to file their reply and counter- claim, no hearing would be possible on 26th September, 2000 and, therefore, another date may be fixed for hearing.
17. On 26th September, 2000, the Respondents appointed M.D. Sharma, Senior Accounts Officer of Respondent No.1 as the Sole Arbitrator in place of Sanjeev Garg who had resigned as the Sole Arbitrator. The Petitioner was informed that M.D. Sharma was requested to continue the arbitration proceedings.
18. AA No.190/2000 was eventually taken up for final disposal and by the impugned order dated 16th June, 2001 it was disposed of by a learned Single Judge of this Court whereby the petition was dismissed.
19. It was held by the learned Judge in the impugned order that the Petitioner had participated in the arbitration proceedings by appearing before the learned Arbitrator on 5th September, 2000 and filing its statement of claim. It was held that not only this, the Petitioner had also sent a letter to the learned Arbitrator on 25th September, 2000 to intimate the next date of hearing. It was held that the conduct of the Petitioner was unambiguous and clear and that the Petitioner had waived its rights to have some independent person appointed as an Arbitrator by the Court since it had not only submitted to the jurisdiction of the learned Arbitrator but had taken part in the arbitral proceedings. It was held that even though the Respondents' right to appoint an Arbitrator had ceased after the filing of the petition under Section 11(6) of the Act, since the Petitioner had not only accepted the appointment of the learned Arbitrator but had, by its conduct, expressed its unequivocal intention to get the disputes resolved by the learned Arbitrator, it had waived its right under Section 11(6) of the Act for the appointment of an independent Arbitrator by the Court.
20. Learned counsel for the parties made their submissions before us on 19th and 20th March, 2002 when judgment was reserved.
21. The main thrust of the argument of learned counsel for the Petitioner was that Sanjeev Garg could not have been appointed as the Arbitrator by the Respondents and after his resignation, M.D. Sharma could not have been appointed as the Arbitrator. According to learned counsel, the appointment of both these persons as Arbitrators was void abinitio since the Respondents did not have the right to appoint an Arbitrator after the Petitioner had filed AA No.190/2000 under Section 11(6) of the Act.
22. We do not propose to decide the various contentions urged before us by learned counsel for the Petitioner. This is because whether the Arbitrator has jurisdiction to resolve the disputes between the parties or whether he was validly appointed as an Arbitrator can be decided by the learned Arbitrator himself, particularly since the learned Arbitrator has jurisdiction to decide this issue in terms of Section 16 of the Act. We do not think it proper to permit the Petitioner to by-pass the remedy provided by law and ask us to decide the question whether the learned Arbitrator had been validly appointed or not. The Act is a complete code by itself, in matters pertaining to arbitration, and we are of the view that the Petitioner must follow the procedure laid down by the Act. Interference by the Court in such matters should be minimal, if at all. It is for this reason that we are not commenting one way or the other on the various submissions urged by learned counsel for the parties since our views have the effect of transgressing upon the jurisdiction of the learned Arbitrator.
23. Under the circumstances, we hold that it will be appropriate if the Petitioner moves an application before the learned Arbitrator challenging his appointment and jurisdiction to resolve the disputes between the parties. We have no doubt that the learned Arbitrator will decide the application, as and when it is moved by the Petitioner, in accordance with law and after hearing both the parties.
24. Consequent to the view that we have taken, we decline to interfere in the writ petition filed by the Petitioner or to set aside the impugned order dated 16th March, 2001 passed by a learned Single Judge of this Court.
25. Needless to say, since the Supreme Court has held in Konkan Railway Corporation Ltd. & Anr. v. Rani Construction Pvt. Ltd., that the impugned order is an administrative order, the observations made therein will not come in the way of the learned Arbitrator deciding, in accordance with law, the question of his jurisdiction, if it is raised by the Petitioner.
26. Looking to the facts of the case, there will be no order as to costs.