Jammu & Kashmir High Court
M/S Pardeep Electrical And Building Pvt vs Union Of India And Others on 23 March, 2021
Author: Chief Justice
Bench: Chief Justice
Sr. No. 238
HIGH COURT OF JAMMU AND KASHMIR
AT JAMMU
CJ Court
Case: Arbitration Petition No. 34 of 2020
M/s Pardeep Electrical and Building Pvt. ...Petitioner(s)/Appellant(s)
Ltd.
Through: Sh. Pranav Kohli, Sr. Advocate
with Sh. Farhan Mirza, Advocate.
v/s
Union of India and others .... Respondent(s)
Through: Mr. Vishal Sharma, ASGI
CORAM: HON'BLE THE CHIEF JUSTICE
ORDER
01. Heard Sh. Pranav Kohli, Senior counsel assisted by Sh. Farhan Mirza, counsel for the petitioner and Sh. Vishal Sharma, Assistant Solicitor General of India for the respondents.
02. The petitioner is a Company that is registered as SS CLASS Contractor and is engaged in the business of construction of buildings and providing civil services like roads, electrification, water supply, Central air conditioning etc.
03. The petitioner was the lowest bidder for the project at Leh in respect whereof an agreement was executed on 25.01.2011 and the work order was issued on 04.04.2011.
04. The aforesaid tender notice/work order/agreement provided that the general conditions of contract in IAFW-2249 would apply. The said general conditions of contract contain clause 70 which provides for resolution of the dispute by arbitration.
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05. The aforesaid contract provided that the work assigned has to be completed within 33 months or in the extended period.
06. The petitioner was handed over the site on 4th March 2011, the work commenced on 5th March 2011 and it was to be completed by 3 rd December 2013. The extension for completing the work was granted upto 30th November 2017. Thereafter, no extension of time was permitted rather the petitioner was directed to close the work by the Engineer-in-Chief who visited the site between 27th October to 29th October 2017.
07. On account of certain disputes in connection with the aforesaid contract, the petitioner invoked the arbitration clause by issuing and serving various notices, the final one happened to be of 27th April 2016 which was followed by communications to the same effect dated 28.09.2020 but the respondents failed to appoint the arbitrator.
08. The petitioner in the above situation has moved this petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 („the Act‟) for appointment of an arbitrator.
09. The only objection taken by the respondents to this petition is that in view of the conditions contained under the arbitration clause 70, the petitioner is not entitled to demand arbitration until and unless the work is completed or a new contractor is appointed to complete the unfinished work of the petitioner.
10. In order to assess whether the petitioner is entitled to seek appointment of an arbitrator under the facts and circumstances of the case especially in view of the language used in clause 70 of the contract/agreement, it is necessary to reproduce the aforesaid arbitration clause.
"70. Arbitration--All disputes, between the parties to the Contract (other than those for which the decision of the C. 3 Arbitration Petition No. 34 of 2020 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 a [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.
Provided always that commencement or continuance of any arbitration proceedings hereunder or otherwise shall not in any manner militate against the Government‟s right of recovery from the Contractor as provided in Condition 67 hereof.
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, exprate, if either party, inspite of a notice from the Arbitrator fails to take part in the proceedings.
The Arbitrator may, from time to time with the consent of the parties, enlarge, the time 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 may be on all matters refererd to him and shall indicate his findings, along with the sums awarded, separately on each individual, item of dispute. [The arbitrator shall give reason for the award in each and every case irrespective of the value of claims or counter claims.] 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."
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11. A plain reading of the aforesaid clause reveals that all disputes between the parties to the contract after written notice by either of the parties are referable to arbitration. It further provides that the reference shall not take place until the completion or the alleged completion of the works or termination of the contract under condition Nos. 55, 56 and 57 of the contract unless both the parties agree in writing for such a reference. A further condition has been imposed that in the event of abandonment of work or cancellation of contract under conditions 52, 53 or 54 of the contract, the reference shall not take place until alternative arrangements have been finalized by the Government to get the work completed by or through any other contractor or agency.
12. The first two proviso of the said clause places two riders in seeking appointment of arbitrator. First until completion of the works and second until alternate arrangements are made to get the works completed.
13. In M/s Mohindra Bros versus Union of India & others, 2012 SCC Vol IV JKJ 602, it has been held that even if there is a prohibition of seeking reference under the arbitration clause till the completion of the work, such condition would not come into play after the period of contract has expired.
14. In the present case, the last date for completion of the contract was 30th November 2017 beyond which no extension was granted.
15. The completion of contract means the period fixed for completing the contract including the extended time which also expired on 30.11.2017. Therefore, the period of contract had come to end before reference was sought. Thus, there was no rider upon the petitioner to have preferred this petition seeking appointment of an arbitrator.
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16. Moreover, in terms of the letter dated 14.10.2020 on record, the Engineer-in-chief‟s Branch Military Engineer Services directed to foreclose the contract which means not only stoppage of work but also termination of contract.
17. In view of the aforesaid facts and circumstances, there appears to be no legal impediment as per clause 70 of the contract in seeking reference of the disputes to the arbitrator.
18. Accordingly I appoint Shri Justice M. M. Kumar (a former Chief Justice of this High Court) R/o 3405, Sector 24, Chandigarh, as the sole arbitrator who shall proceed in the matter in accordance with the provisions of the Act to make an award within the time provided in the Act itself after charging the prescribed fee along with incidental expenses to be shared by the parties.
19. Arbitration Petition stands disposed of.
(PANKAJ MITHAL) CHIEF JUSTICE Jammu 23.03.2021 Sunita.
Whether the order is speaking? Yes
Whether the order is reportable? Yes/No