Union Of India & Anr. vs M.P. Gupta
1998 Latest Caselaw 667 Del

ORDER

K.S. Gupta, J.

1. This appeal by the Union of India & Another is directed against the judgment dated November 20, 1997 passed by the learned Single Judge appointing Justice P.K. Bahri (Retd.) as arbitrator to adjudicate upon the claims mentioned in para 3 of the judgment.

2. Indisputably petition under Section 20 of the Arbitration Act, 1940 (for short the 'Act') was filed by M.P. Gupta, respondent, inter alia, alleging that in response to an invitation to tender for execution of the work of "Zone No. I : Supplying and stacking hand broken stone ballast (hard stone) conforming to N. Rly. CE's Circular No.170/P. way along chess/toe from Km 1/0 to Km 50/0 and in ballast depot at Mandore as per N. Rly. Standard specifications and special tender condition in connection with Jodhpur Jaisalmer B.G.Conversion Project. 5000 cum and 45400 cum", he submitted the tender which was accepted by the Chief Administrative Officer, Headquarter Office, N. Rly, Kashmere Gate, Delhi, for and on behalf of the President of India. An agreement bearing No. 74-W/GC/8/JU-JSM/WA dated August 17, 1994 containing arbitration clause was executed between the parties. On dispute having arisen, by the letter dated August 29, 1995 the respondent invoked arbitration clause and asked the appellants to appoint arbitrator and to refer the claims annexed with the letter to arbitration. Said letter was followed by a reminder dated September 6, 1996. Appellants, however, failed to appoint the arbitrator till date. It was prayed that the appellants be directed to file the arbitration agreement in court and the disputes/claims as detailed in para 12 of the petition be referred to arbitration in terms of arbitration clause No.64 of the agreement.

3. Considering the affidavit filed by the respondent the petition was allowed against the appellants who were proceeded ex-parte, in terms of the judgment under appeal.

4. Alongwith the memorandum of appeal appellants also filed C.M.181/98 under Section 5 of the Limitation Act seeking condensation of 42 days delay in filing the appeal supported by the affidavit of Vir Narian, Deputy Chief Engineer, Northern Railway, Jodhpur. We are satisfied that the said C.M. discloses sufficient ground for condoning the delay in filing the appeal and, therefore, the delay in question is condoned.

5. Only submission advanced by Shri D.K. Kapur appearing for the appellants was that in the petition under Section 20 of the Act the relief claimed by the respondent is to make an order of reference of the claims as detailed in Para 12 thereof to arbitration in terms of clause 64 of the agreement dated August 17, 1994. Under that clause claims in question being for an amount exceeding Rs. 50,000/- can be adjudicated upon only by two gazetted railway officers to be appointed by the General Manager. Thus, instead of appointing Justice P.K.Bahri (Retd.) as the arbitrator the learned Single Judge should have directed the General Manager to appoint arbitrator to decide the claims preferred by the respondent. Reliance was placed on the decisions in Bhupinder Singh Bindra Vs. Union of India & Another, 1995 III AD S.C. (C) 485 and M/s. Indian Drugs & Pharmaceuticals Ltd. Vs. M/s. Indo Swiss Synthetics Gem Manufacturing Co. Ltd. & Others, . On other hand, relying on the decisions in Nandyal Co-op Spinning Mills Ltd. Vs. K.V. Mohan Rao, 1993(1) Arb. L.R. 469 and G. Rama Chandra Reddy & Co. Vs. Chief Engineer. M.E.S. Madras Zone. 1994(2) Arb. L.R. 61, Shri Vivekanand for the respondent has supported the impugned judgment.

6. In the decision in Nandyal Co-op Spinning Mill's case (supra) the respondent entered into a contract with the appellant to construct a building and during its execution since differences had arisen the respondent by the letter dated July 27, 1987 requested the administrative head of the appellant to appoint an arbitrator within 15 days from the date of its receipt. On August 8 & 18, 1987 the respondent was informed by the appellant that the matter was under consideration. When the respondent's renewed request in the letter on August 17, 1987 evoked no action, he filed O.P. No. 167/88 on July 7, 1988 in the Court of Subordinate Judge at Nandyal to appoint an arbitrator. Notice of the petition was issued to the appellant. In the meantime, by the letter dated July 27, 1988 the respondent was informed of the appointment of Yethiraj, Superintending Engineer of BHEL, Hyderabad, as sole arbitrator. However, by the order dated March 21, 1991 the court appointed Justice C. Sriramulu (Retd.) as arbitrator. C.R.P. No. 1381/91 filed by the appellant against the said order was dismissed by the High Court by an order dated October 25, 1992. On these facts in the SLP taken out by the appellant against the order of the High Court it was held in para 10 of the report which is relevant, thus:

"It would thus be clear that if no arbitrator had been appointed in terms of the contract within 15 days from the date of the receipt of the notice, the Administrative Head of the appellant had abdicated himself of the power to appoint arbitrator under the contract. The court gets jurisdiction to appoint an arbitrator in place of the contract by operation of Section 8(1)(a). The contention of Sri Rao, therefore, that since the agreement postulated preference to arbitrator appointed by the Administrative Head of the appellant and' if he neglects to appoint, the only remedy open to the contractor was to have recourse to civil suit is without force. It is seen that under the contract the respondent contracted out from adjudication of his claim by a civil court. Had the contract provided for appointment of a named arbitrator and the named person was not appointed, certainly the only remedy left to the contracting party was the right to suit. That is not the case on hand. The contract did not expressly provide for the appointment of a named arbitrator. Instead power has been given to the Administrative Head of the appellant to appoint sole arbitrator. When he failed to do so within the stipulated period of 15 days enjoined under section 8(1)(a), then the respondent has been given right under clause 65.2 to avail the remedy under Section 8(1)(a) and request the court to appoint an arbitrator. If the contention of Sri Rao is given acceptance, it amounts to put a premium on in action depriving the contractor of the remedy of arbitration frustrating the contract itself."

7. Said ratio in Nandyal Co-op Spinning Mill's case (supra) was quoted with approval in the decision in G. Rama Chandra Reddy's case (supra) by the Supreme Court.

8. Decision in Bhupinder Singh Bindra's case (supra) relied on behalf of the appellant, was rendered with reference to the power of the civil court under Sections 5,8,11 & 29 of the Act in revoking the appointment of an arbitrator appointed in terms of arbitration clause of the contract entered into between the Parties. Further, the decision in M/s. Indian Drugs & Pharmaceuticals's case (supra) was given with reference to the three questions posed in para 3 of the report at page 543. Obviously, both these decisions have no applicability to the facts of the instant case.

9. Adverting to the facts of the present case, it is not even denied by the appellants that invoking aforesaid arbitration clause No. 64 the respondent sent letter dated August 29, 1995 to the appellants to appoint arbitrator(s) and refer the claims in question for adjudication and that by the time the petition came to be filed in October 1996 the General Manager had not appointed any arbitrator. Both the decisions in Nandyal Co-op Spinning Mills and G. Rama Chandra Reddy (supra) were rendered by the Apex Court on the petitions for appointment of arbitrator under Section 20 of the Act. That be the Position the instant case is squarely covered by both these decisions and the correctness of the impugned judgment cannot be assailed on the ground referred to above advanced on behalf of the appellants. Appeal thus deserves to be dismissed.

10. Consequently, the appeal is dismissed. No order as to costs.