Union Of India (Uoi) Through ... vs Shri Anil S/O Bhagwandas Gangwani ...
2003 Latest Caselaw 695 Bom

JUDGMENT

R.J. Kochar, J.

1. The petitioners are aggrieved by the impugned order passed by the learned Designated Court on 27th July, 2001, whereby the learned Judge had allowed the application filed by the respondent no.1 for appointment of an Arbitrator under section 11(6) of the Arbitration and Conciliation Act, 1996, and to refer the disputed claim of the applicant for adjudication to the Arbitrator. We have carefully gone through the order of the learned Judge and we have also heard the learned counsel for both the sides at length. The learned Designated Court has considered all the aspects of the matter threadbare including the Clauses in the Contract between the parties.

2. The respondent-applicant had by his letter dated 25th December, 2000 raised a dispute and difference in respect of the dues claimable by him from the petitioner. He has set out his disputes and differences in the said letter and in the last paragraph he has specifically stated as under :-

"3.0 - Under the circumstances as stated above, it is requested that various claims as listed in Annexure I may kindly be considered and amount paid to me at your earliest. This may kindly be considered as request under paras 63, 64 of General conditions of the contract."

3. The petitioners have replied the said letter by their letter dated 27th March, 2001. We are not concerned with the other contents of the said letter, in the last paragraph, which is relevant reads as under :-

"Since you have abandoned the work and persistently disregarded the instructions of the Engineer-in-charge action in terms of clause 62(i) of GCC has been initiated against you by the Railway.

In terms of clause 63 of GCC clause 62(i) is deemed as "excepted matters" and shall stand specifically excluded from the purview of arbitration clause and shall not be referred to arbitration.

Hence your request for settlement of dispute/claims under clause 63 & 64 can not be accepted by the Railway Administration. Due to non completion of the work by you the Railway has in fact suffered inconvenience and heavy losses."

4. It appears that since the petitioners had point-blank refused to appoint any Arbitrator and refer the dispute to Arbitration, the respondent-applicant was constrained to approach the Designated Court under the aforesaid provisions of the law for appointment of an Arbitrator by the Court and for reference of the dispute and difference between the parties to the said Arbitrator for adjudication. The learned Designated Judge has considered the pleadings and submissions of both the parties and has finally accepted the contentions put-forward by the respondent-applicant and has appointed an Arbitrator Shri Milind C.Kale, Civil Engineer, Nagpur, as the Sole Arbitrator. The application filed by the respondent-applicant was allowed with costs.

5. Shri Lambat, the learned counsel appearing for the petitioners has strenuously urged before us that though the letter dated 25th December, 2000 was addressed by the respondent-applicant, it was not an application demanding appointment of Arbitrators as per Clauses 63 read with 64 of the Contract. He pointed out that in that letter the respondent had only raised disputes and differences and that the letter could not be construed as demand for the appointment of Arbitrators, as contemplated under the Contract. He pointed out that by their reply dated 27th March, 2001, the petitioners had pointed out that there was no case for reference of the dispute or difference to Arbitration. Thereafter according to the learned counsel as contemplated under the Contract, the respondent should have specifically requested or applied to the petitioners for an appointment of Arbitrators and thereafter he ought to have waited for a period of 180 days and if the petitioners were not to act upon the said letter, in that case, it would have been open for him to approach the Designated Court under section 11(6) of the Act. The learned counsel further urged that the respondent had approached the Designated Court prematurely. He has also relied on the judgment of the Supreme Court reported in 1979 Supreme Court Page 1457, Union of India Vs. Prafulla Kumar Sanyal, to press his point that the appointment of Arbitrators should be within the framework of the contract between the parties.

6. We are not able to agree with the contentions raised by the learned counsel for the petitioners. The letter dated 25th December,2000 has not only raised the disputes and differences but has finally requested the petitioners to treat the said letter as demand as contemplated under Clauses 63 and 64 of the Contract. It, therefore, cannot be construed or said that there was no demand made by the respondent-applicant for an appointment of Arbitration. There is no bar that no such composite or joint request can be made. The respondent-applicant has very clearly stated in his letter after raising disputes and differences that if the petitioners were not satisfied that the disputes and differences raised by him in that case, the disputes and differences may be treated as disputes and differences under Clauses 63 and 64 of the contract and the same may be referred to the Arbitrators. The petitioners sent their reply dated 27th March, 2001 refusing point-blank to acceede to the request of the respondent for an appointment of Arbitrator. The paragraph which we have reproduced from the reply of the petitioners speaks for itself. The petitioners have very emphathetically rejected the demand made by the respondent. It, therefore, cannot be said that the respondent-applicant was not justified in understanding or construing the contents of the reply sent by the petitioners refusing to accept the request of the respondent-applicant to refer the differences and disputes to the Arbitration under Clauses 63 and 64 of the contract. It is mere hyper technicality and very pendentic approach which we find in the submissions of the learned counsel for the petitioners that the respondent-applicant ought to have sent another letter specifically requesting the petitioners to appoint an Arbitrator under the aforesaid Clauses of the contract and thereafter he ought to have waited for 180 days and if the petitioners did not reply his letter within 180 days then only it was open to him to approach the Designated Court under Section 11(6) of the act. The purport and purpose and specific request for an appointment of an Arbitration is only that no party should be taken by surprise. In the present case the respondent had put the petitioners on guard by writing his first letter dated 25th December, 2000, wherein he had incorporated a specific request that the disputes and differences between the parties should be referred to Arbitration as contemplated under Clauses 63 and 64 of the contract. To that request the petitioners have sent the point-blank refusal to appoint any Arbitrator as his case according to the petitioner did not fall within the said category of the contract and, therefore, the request made by the respondent-applicant was wholly turned down by the petitioners. There was a proposal and there was rejection of the said proposal. Nothing more is contemplated under the law. The respondent-applicant was perfectly justified in approaching the Court under section 11(6) of the Act for an appointment of Arbitrator and it was not necessary for him to wait for another 180 days to get negative reply from the petitioners. It would have only delayed the matter. We do not find any fault with the finding given by the learned Judge of the Designated Court in appointing an Arbitrator Shri Milind C.Kale, Civil Engineer from Nagpur, as Arbitrator. In the judgment relied on by the learned counsel, it is observed by the Supreme Court that it was desirable to appoint an Arbitrator according to the terms of the contract. In the present case, the petitioners had turned down the request of the respondent and, therefore, now it cannot be pleaded by them that Arbitrator should be from the contract. They have lost the said opportunity when they had turned down the request of the respondent-applicant for an appointment of Arbitrator as contemplated by Clauses 63 and 64 of the contract. It is not laid down by the Supreme Court that in every case, the appointment of Arbitrator must be from the contract. The Supreme Court has only expressed desirability of such action. In the aforesaid circumstances, and for reasons recorded by us, there is no merit and substance in the petition, which stands rejected.

7. To be fair to the learned counsel for the petitioners, we may mention that the learned counsel has suggested that two Arbitrators from the side of the petitioners should be allowed as Arbitrators. The learned counsel for the respondent-applicant has vehemently opposed to accept two names of the Arbitrators. He was fairly agreeable for one name while the learned counsel for the petitioners insisted for two names i.e. Arbitration by three members. As there is no agreement between the parties, we leave the matter at that stage.