Rajasthan High Court - Jaipur
M/S Divija Construction vs State Of Rajasthan on 7 September, 2022
Author: Pankaj Bhandari
Bench: Pankaj Bhandari
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
S.B. Arbitration Application No. 82/2020
M/s Divija Construction, Through Its Partner Shri Satish Goyal
S/o Late Sh. Baijnath, Aged About 55 Years, R/o 79/12, Shipra
Path, Mansarovar, Jaipur-302020 (Raj.)
----Applicant
Versus
1. State Of Rajasthan, Through Principal Secretary, LSGD,
Government Of Rajasthan, Secretariat, Janpath, Jaipur-
302005
2. Director, Local Self Government Department (LSGD), G-3,
Rajmahal Residential Area, C-Scheme Near Civil Line
Phatak, Jaipur-302016
3. Municipal Council Dholpur, Through Its Commissioner,
Gaurav Path, Hardev Nagar, Dholpur, Rajasthan-328001.
4. Executive Engineer (PIU), Municipal Council Dholpur,
Gaurav Path, Hardev Nagar, Dholpur, Rajasthan-328001.
----Respondents
For Applicant(s) : Mr. Anil Kumar Jha
Mr. G.D. Manglani
For Respondent(s) : Mr. Sanjeev Singhal
Mr. Arpit Srivastava for respondent
Nos.3 & 4 HON'BLE MR. JUSTICE PANKAJ BHANDARI Order RESERVED ON :: 31/08/2022 PRONOUNCED ON :: 07/09/2022
1. The applicant has filed this arbitration application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Arbitration Act") seeking appointment of an arbitrator.
2. It is pleaded in the arbitration application that the non- applicants-respondents awarded a work of providing, laying, (Downloaded on 09/09/2022 at 10:29:22 PM) (2 of 5) [ARBAP-82/2020] jointing, testing and commissioning property connection for sewer lines (RUIDP) in Municipal Area of Dholpur to the applicant and issued a letter of intent dated 24.01.2018, which the applicant replied vide its letter of acceptance dated 02.02.2018. The applicant within the period stipulated in the agreement, out of 14775 estimated sewer connections, as per the work order, sewer connections work in 11396 house were executed. The applicant made request for resolution of the hindrances, but the hindrances were created in the progress of work and after the applicant submitted a claim of Rs.1,39,84,581/-, the respondents began to threaten the applicant for action of risk and cost and debarring the firm vide its final notice dated 04.06.2020. The applicant under Clause 21.3.2 of the General Conditions of the Contract invoked the arbitration clause vide its notice dated 19.06.2020 and appointed Shri Gokul Prasad Sharma, Retired Chief Engineer as arbitrator on his behalf. The respondents failed to appoint the arbitrator on their behalf which frustrated the procedure for constitution of the Arbitral Tribunal, hence, the applicant had to prefer the present arbitration application before this Court.
3. It is contended by the counsel for the applicant that there is an arbitration clause and the applicant is entitled to have an arbitrator appointed, for which, the respondents contends that the dispute was not sent to the DRB and without there being any order of the DRB, the same could not be referred to arbitration.
4. On behalf of the respondents, reply has been filed. It is stated in the reply that the applicant has not put the matter before the Dispute Resolution Board (hereinafter referred to as "the DRB") and provisions of arbitration can be invoked only when the decision of DRB is not acceptable to the parties. It is also (Downloaded on 09/09/2022 at 10:29:22 PM) (3 of 5) [ARBAP-82/2020] stated that Shri Satish Goyal is an authorized partner, but no authorization letter has been filed, nor any authority has been submitted, which shows that Shri Satish Goyal is the authorized partner of the firm.
5. In rejoinder filed by the applicant to the reply filed by respondent Nos.3 and 4, it is stated that a general power of attorney has been issued in favour of the applicant, but by inadvertence the same could not be produced before the Court. A copy of the same has been filed as Annexure-35. It is also stated that no DRB was constituted and no Dispute Resolution Agreement was executed between the applicant and the respondents and therefore, there was no question of referring the dispute to the DRB.
6. I have considered the contentions raised by the learned counsel for the parties and carefully perused the agreement.
7. Clause 3.0 of the Agreement reads as under:
"3.0 Arbitration:
(a) Any dispute in respect of which the recommendations (if any) of DRB has not become final and binding, shall be finally settled by arbitration in accordance with the Indian Arbitration and Conciliation Act, 1996, or any statutory amendment thereof.
(b) The Arbitral Tribunal will comprise three members, on each to be appointed by the Procuring Entity and the Contractor. The third Member, who will also act as the presiding Member, will be appointed by mutual consent of the first two Members. If the parties fail to reach an agreement on the third Member then on request of either or both parties, appointment will be made by concerned Administrative Department in case of Government Departments and Head of the Organization (Chairman etc.) concerned in other cases.
(c) The Tribunal shall have full power to open up, review and revise any certificate, determination, instruction, opinion or valuation of the Engineer-in-(Downloaded on 09/09/2022 at 10:29:22 PM)
(4 of 5) [ARBAP-82/2020] Charge, and any decision of the DRB, relevant to the dispute.
(d) Neither party shall be limited in the proceedings before the Tribunal to the evidence or arguments previously put before the DRB to obtain its decision, or to the reasons for dissatisfaction given in its notice of dissatisfaction.
(e) Arbitration may be commenced prior to or after completion of the works. The obligations of the Parties, the Engineer-in-Charge and the DRB shall not be altered by reason of any arbitration being conducted during the progress of the work."
8. As per Appendix-B, a formal Sub-Clause of obtaining dispute resolution through the DRB will be inserted in the Conditions of the Contract. A separate Dispute Resolution Agreement will also be drawn up, detailing therein provisions like: Eligibility of Members, date of commencement, manner of entry on the reference by the Members and their resignation; obligation of the Members etc. It is evident that in the present case, no Dispute Resolution Agreement was drawn up, hence, there was no question of the applicant referring the matter to DRB, as there was no DRB in existence. The applicant vide its letter dated 19.06.2020 detailed out the statement of claim and informed the respondents that they have failed to settle the claim amicably and that applicant is compelled to refer the dispute for arbitration by invoking the arbitration process under Clause 21.3.2 of the General Conditions of the Contract. No reply was given to the said letter.
9. The objection of counsel for the respondents that the matter was not referred to the DRB cannot be accepted for the very reason that the DRB never came into existence. Admittedly, there is an arbitration clause and a dispute exists between the parties, (Downloaded on 09/09/2022 at 10:29:22 PM) (5 of 5) [ARBAP-82/2020] in spite of the notice given by the applicant on 19.06.2020, the arbitrator has not been appointed. Hence, I deem it proper to allow the arbitration application and appoint Mr. Justice S.K. Garg (Retired), 851, Mahaveer Nagar, Tonk Road, Jaipur, as the sole arbitrator to decide the dispute.
10. The appointment of the sole arbitrator is subject to the declarations being made under Section 12 of the Arbitration and Conciliation Act, 1996 with respect to the independence and impartiality, and the ability to devote sufficient time to complete the arbitration within prescribed period.
11. Accordingly, arbitration application stands allowed. The arbitrator shall be entitled to lay down fees as provided under Manual of Procedure for Alternative Disputes Resolution, 2009 as amended from time to time.
12. Registry is directed to intimate Mr. Justice S.K. Garg (Retired) and obtain his formal consent.
13. The observations made herein-above are only for the purpose of deciding the present application and the same will not disentitle the parties to raise all valid objections before the learned Arbitrator and the Arbitrator will be free to dispose the said objection without being influenced by the observations made by this Court.
(PANKAJ BHANDARI),J SUNIL SOLANKI /PS (Downloaded on 09/09/2022 at 10:29:22 PM) Powered by TCPDF (www.tcpdf.org)