Delhi High Court - Orders
Pramod Kumar Goel vs Delhi Development Authority & Anr on 12 July, 2021
Author: Sanjeev Narula
Bench: Sanjeev Narula
$~2
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB.P. 188/2021
PRAMOD KUMAR GOEL ..... Petitioner
Through: Mr. Bhupesh Narula, Advocate.
versus
DELHI DEVELOPMENT AUTHORITY & ANR. ..... Respondents
Through: Mr. Ajay Brahme Mitra, Advocate for
Respondent Nos. 1 to 3.
CORAM:
HON'BLE MR. JUSTICE SANJEEV NARULA
ORDER
% 12.07.2021 [VIA VIDEO CONFERENCING]
1. The present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeks appointment of a Sole Arbitrator. The Petitioner participated in the tender floated by Respondent for the construction of 20 MIG houses at Ashok Nagar along Faiz Road, Delhi with an estimated cost of Rs. 3,24,91,687/-. The Petitioner emerged as the successful bidder; which lead to the execution of the agreement dated 22nd September, 2018, which is the subject matter of the present petition. The arbitration clause contained in the aforesaid agreement is extracted hereinbelow:
"Clause 25 Settlement of Disputes & Arbitration Except where otherwise provided in the contract, all questions and disputes relating to the specifications, design, drawings, and instructions here-in before mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever in any way arising out or relating to the contract, designs, drawings, specifications, estimates, instructions, orders or these conditions or otherwise ARB.P. 188/2021 Page 1 of 6 concerning the works or the execution or failure to execute the same whether arising during the progress of the work or after the cancellation, termination, completion or abandonment thereof shall be dealt with as mentioned hereinafter:
(i) If the contractor considers any work demanded of him to be outside the requirements of the contract, or disputes any drawings, record or decision given in writing by the Engineer-in-Charge or if the Engineer in Charge considers any act or decision of the contractor on any matter in connection with or arising out of the contract or carrying out of the work, to be unacceptable and is disputed, such party shall promptly within 15 days of the arising of the disputes request the EM or where there is no who shall refer the disputes to Dispute Redressal Committee (DRC) within 15 days along with a list of disputes with amounts claimed if any in respect of each such dispute. The Dispute Redressal Committee (DRC) shall give the opposing party two weeks for a written response and give its decision within a period of 60 days extendable by 30 days by consent of both the parties from the receipt of reference from EM. The constitution of Dispute Redressal Committee (DRC) shall be as indicated in Schedule 'F'. Provided that no party shall be represented before the Dispute Redressal Committee (DRC) by an advocate/legal counsel etc. If the Dispute Redressal Committee (DRC) fails to give its decision within the aforesaid period or any party is dissatisfied with the decision of Dispute Redressal Committee (DRC) or expiry of time limit given above, then either party may within a period of 30 days from the receipt of the decision of Dispute Redressal Committee (DRC), give notice to the EM/DDA, in charge of the work or for appointment of arbitrator on prescribed proforma as per Appendix XV under intimation to the other party.
It is a ... invoking arbitration The EM/DDA shall in such case appoint the sole arbitrator or one of the three arbitrators as the case may be within 30 days of receipt of such a request and refer such disputes to arbitration. Wherever the Arbitral Tribunal consists of three Arbitrators, the contractor shall appoint one arbitrator within 30 days of making request for arbitration or of receipt of request by Engineer-in-charge to EM/DDA for appointment of arbitrator, as the case may be, and two appointed arbitrators shall appoint the third arbitrator who shall act as the Presiding Arbitrator, in the event of a. A party fails to appoint the second Arbitrator, or b. The two appointed Arbitrators fail to appoint the Presiding Arbitrator, then EM shall appoint the second or Presiding Arbitrator as the case may be.
(ii) Disputes or differences shall be referred for adjudication through arbitration by a Tribunal having sole arbitrator where Tendered amount of Rs. 100 Crore or less. Where Tendered Value is more than Rs. 100 Crore. Tribunal shall consist of three Arbitrators as above. The requirements of the Arbitration and Conciliation Act, 1996 (26 of 1996) and any further statutory modifications or re-enactment thereof and the rules made there under and for the time being in force shall be applicable.
It is a term of this contract that the party invoking arbitration shall give a list of disputes with amounts claimed, if any, in respect of each such dispute along with the notice for appointment of arbitrator and giving reference to the decision of the DRC. It is also a term of this contract that any member of the Arbitration Tribunal shall be a Graduate Engineer with experience in handling public works engineering contracts at a level not lower than Chief Engineer (Joint Secretary level of Government of India). This shall be treated as a mandatory qualification to be appointed as arbitrator. Parties, before or at the time of appointment of Arbitral Tribunal may agree in writing for fast track arbitration as per the Arbitration and Conciliation Act, 1996 (26 of 1996) as amended in 2015 whereby the counter claims if any can be directly filed before the arbitrator without any requirement of reference by the appointing authority, the arbitrator shall adjudicate on only such disputes as are referred to him by the appointing authority and give separate award against each-dispute and claim referred to him in all cases where the total amount of the claims by any party exceeds Rs. 1,00,000/-, the arbitrator shall give reasons for the award.
ARB.P. 188/2021 Page 2 of 6It is also a term of the contract that if any fees are payable to the arbitrator, these shall be paid as per the Act.
The place of arbitration shall be as mentioned in Schedule-F. In case there is no mention of place of arbitration, the arbitral tribunal shall determine the place of arbitration.
The venue of the arbitration shall be such place as may be fixed by the Arbitral Tribunal in consultation with both the parties. Failing any such agreement, then the Arbitral Tribunal shall decide the venue.
It is also a term of the contract that the arbitrator shall be deemed have to entered on the reference on the date he issues the notice to both the parties calling them to submit their statement of claims and counter statement of claims. The venue of the arbitration in Delhi shall be such place as may be fixed by the arbitrator in his sole discretion. The cost of their reference and of the award shall be in the discretion of the arbitrator who may direct to any by whom and in what manner, such costs or any party thereof shall be paid and fix or settle the amount of costs to be so paid. The fees, if any, of the arbitrator, shall, if required, to be paid before the award is made and published, be paid half and half by each the parties and shall be as under:
SUM IN DISPUTE MODEL FEE
Up to Rs. 5.0 lacs Rs. 45,000/-
Above Rs. 5 lacs & up to Rs. 45,000/- plus 3.5% of the claim amount over & above Rs.
Rs. 20 lacs 5.0 lacs
Above Rs. 20 lacs & up Rs. 97,500/- plus 3% of the claim amount over & above Rs. 1
to Rs. 1 crore crore
Above Rs. 1 crore & up Rs. 3,37,000/- plus 1% of the claim amount over & above Rs.
to Rs. 10 Crore 1 crore
Above Rs. 10 crore & up Rs. 12,37,000/- plus 0.75% of the claim amount over &
to Rs. 20 crore above Rs. 10 crore
Above Rs. 20 crore Rs. 19,87,000/- plus 0.50% of the claim amount above Rs. 20
crores with a ce of Rs. 30 lacs
(A). The Decision of the Superintending Engineer regarding the quantum of reduction as well as justification thereof in respect of rates for substandard work which may be decided to be accepted will be final and could not be open to Arbitration.
Where the arbitral award is for the payment of money no interest shall be payable on whole or any party of the money for any period till the date on which the award is made." (sic.)
2. Petitioner contends that the Respondent was unable to provide unencumbered and complete site so as to enable the Petitioner to carry out the work within the stipulated contractual period, and there were several hindrances which resulted in delay in the execution of the work. Respondent issued a show cause notice dated 10th October, 2019 upon the Petitioner's failure to perform its contractual obligations, asking the Petitioner to explain as to why the contract may not be terminated. Petitioner replied to the said ARB.P. 188/2021 Page 3 of 6 notice and explained the reasons for delay. Respondent terminated the contract on 02nd March 2020, and claimed compensation. Several other correspondences were exchanged between the parties in this regard. Ultimately, in terms of the arbitration clause, the Petitioner on 18th August 2020 requested the Engineer Member (i.e. EM) to refer the disputes to Dispute Redressal Committee (i.e. DRC). Since the Engineer Member failed to act as per above terms, the Petitioner has filed the instant petition.
3. The Petitioner had earlier also approached this Court under Section 9 of the Act, seeking appointment of an independent person in order to verify the measurements qua the work executed by it, and also to make an inventory of the material including tools and plants (T&P) and machinery lying at the site. This Court vide order dated 16th October 2020 in OMP (I) (COMM) 244/2020, accepted the request and appointed Retd. Assistant Engineer, CPWD, as an independent engineer to visit the site and record the measurements.
4. The Respondent, on the other hand, while controverting the contentions of the Petitioner, submits that vide its letter dated 2nd July, 2021, it has appointed an arbitrator in accordance with the arbitration clause contained in the agreement.
5. In view of such stand taken by the Respondents, the existence of the arbitration agreement is not in dispute. The only question therefore arises is whether the appointment made by the Respondents after filing of the present petition would have any bearing on the petition. On this issue, the law is well settled. Although the arbitration clause provides for unilateral ARB.P. 188/2021 Page 4 of 6 appointment of a Sole Arbitrator by the Respondent, such an appointment is not permissible in view of the decision of the Supreme Court in Perkins Eastman Architects DPC and Ors. Vs. HSCC (India) Ltd., AIR 2020 SC
59. Further, as held by the Supreme Court in a catena of judgments, the respondent is deemed to have forfeited it's right to nominate the arbitrator once a petition under Section 11 has been filed. (See: Datar Switchgear Ltd. Vs. Tata Finance Ltd., (2000) 8 SCC 151, and Deep Trading Company v. Indian Oil Corporation, (2013) 4 SCC 35). Concededly, the nomination of the arbitrator by the Respondent is subsequent in time to the filing of the present petition; therefore, the same is non est in law.
6. The counsel for the Respondents submits that keeping in view the technical nature of the dispute, the Court may consider appointing an arbitrator who has the technical knowledge of the subject matter. He suggests the name of the arbitrator who was nominated by the Respondent in its letter dated 2nd July, 2021. Mr. Bhupesh Narula, counsel for the Petitioner, consents to the name suggested by the Respondent.
7. Accordingly, Mr. Avendra Kumar Garg, (Retd.) Spl. DG, CPWD (Contact No. 9910168758) is appointed as the Sole Arbitrator to adjudicate the disputes arising between the parties under the Agreement dated 22nd September, 2018, including by not limited to the claims urged in the present petition.
8. The parties are directed to appear before the learned Sole Arbitrator as and when notified. This is subject to the Arbitrator making the necessary disclosure under Section 12(1) of the Act and not being ineligible under ARB.P. 188/2021 Page 5 of 6 Section 12(5) of the Act.
9. The learned Arbitrator will be paid their fee in terms of the provisions of the Fourth Schedule appended to the Act.
10. It is made clear that the Court has not examined the merits of the claims made by the Petitioner. Both the parties shall be free to file their claims/ counter claims before the learned Arbitrator which shall be decided in accordance with law. All the rights and contentions of the parties are left open.
11. The petition is disposed of in the above terms.
SANJEEV NARULA, J JULY 12, 2021 as ARB.P. 188/2021 Page 6 of 6