Raj Kishan & Co. vs Chairman & M.D., N.T.P.C. & Anr
2000 Latest Caselaw 770 Del

ORDER

Vikramajit Sen, J.

1. The Petitioner has prayed for the revocation of the authority of Respondent No. 2 to act as the Arbitrator and for the appointment of another person as the Arbitrator in his tead. The petition has been opposed, inter alia, on the grounds that this Court does not possess territorial jurisdiction to entertain the petition. Initially, by Orders dated 19.12.1994, this objection was sustained, in large measure because of the Judgment in Patel Roadways Ltd. Vs. Prasad Trading Company, . The Hon'ble Division Bench however reversed the order holding that "Courts at Delhi obviously have jurisdiction. The appellant has not brought the original contract to the notice of the Hon'ble Single Judge. In this view of the matter the impugned order is set aside and the matter is remanded to the Hon'ble Single Judge for disposal in accordance with law."

Learned counsel for the Respondent attempted to resurrect and reagitate this objection before me, but I have declined permission to him to do so.

2. The facts are in a narrow compass. Respondent No. 2 who was the General Manager of Respondent No. 1, was to arbitrate on the disputes between the parties. The Petitioner had invoked the Arbitration Clause vide its letter dated 9.3.1994. It was argued that because a Letter dated 23.3.1994, authored by the Senior Manager (Court) had been issued demanding a sum of Rs. 9,92,946/- from the Petitioner, this Officer being subordinate to Respondent No. 2, shows that Respondent No. 2 is interested in the subject matter of the reference and no justice could be expected from him. The argument is fallacious, frivolous and without merit, since there can be no assumption drawn that a senior officer would be bound by a decision or action of his juniors. The Claims raised by the Petitioner were forwarded with this letter.

3. The next contention raised is that since Respondent No. 2 was called upon to commence Arbitral Proceedings, since he had failed to enter upon Reference within fifteen days of the receipt of the Letter of Invocation, that is 9.3.1994, he had abdicated and forfeited his right to act as the Arbitrator.

4. In B.W.L. Ltd. & Ors. Vs. M.T.N.L. & Ors., I had observed as follows:

"It has now become commonplace for persons who have retained this power of appointment of an Arbitrator, not to act at all or to act with such obduracy as to render an Arbitration clause totally meaningless. The vehemence with which the present Petition was opposed, often caused me to forget that it was only the appointment of an Arbitrator to adjudicate upon the claims raised by both parties and not the disposal of Objections, that was in debate. After hearing lengthy arguments it would be an abdication of judicial duty if the Respondents were still permitted to make an appointment of the Arbitrator. The State is expected to act without arbitrariness and with fairness and in furtherance of the well-being of its citizens. It is also expected to know the law, especially as laid down by the Supreme Court. It cannot be excused if its action tantamount to emasculating the laws - i.e. of expeditious disposal of disputes through arbitration. Apart from the logistic considerations, i.e., encouraging vexatious and obdurate failure to act in accordance with and in confirmity with the compact between parties, there is one further consideration which has persuaded me to make an appointment of an independent person as an Arbitrator. The decision to oppose the present Petition has been taken by the very officer who is to act as the Arbitrator. He has already taken a view in the case and has issued instructions and then action for their implementation. The preponderance of likelihood is that he or his nominee would uphold his view. Having already decided held that the Department is justified in claiming liquidated damages, and having declined the Petitioner's request for the appointment of an Arbitrator, there is a strong pervading risk that a fair decision would not be rendered. Since this Officer also have the power to nominate an Arbitrator, presumably also in service, it is quite possible that his bias would permeate to his nominee. Justice has not only to be done but must also appear to be done. As observed above had the Respondents agreed to appoint an Arbitrator, albeit after some delay, I would have not felt compelled to appoint an Arbitrator de hors the Arbitration Clause. The decision of the Apex Court in Rajan's case would not have application to the present circumstances in view of the recalcitrant refusal of the Respondent to make an appointment of an Arbitrator".

5. The Arbitrator ought to have acted within the said period of fifteen days. Learned counsel for the Petitioner had also submitted that since the Arbitrator had not entered into Reference within fifteen days, as envisaged in the Arbitration Clause, the powers of appointment of an Arbitrator had been abdicated. In this regard reliance has been placed on Nandyal Coop.

Spinning Mills Ltd. Vs. K.V. Mohan Rao, G. Ramachandra Reddy and Co. Vs. Chief Engineer, Madras Zone, Military Engineering Service, . In both these decisions the Apex Court has held that on a failure to act pursuant to receipt of a notice, the right to appoint the Arbitrator would be deemed to have been abdicated and the Court would have jurisdiction under Section 20 for the appointment of any person as an Arbitrator. In International Security and Intelligence Agency Ltd. Vs. Municipal Corporation of Delhi and others, 1996 (1) Arb. L.R. 450, S.K. Mahajan, J., following above decisions, had revoked the authority of the Arbitrator appointed by the Respondent and had made an alternate appointment. It has further been contended by learned counsel for the Petitioner that Respondent No. 2, even if it is assumed that he was justified in law in commencing arbitral proceedings even after the period of fifteen days, he had manifested bias against the Petitioner herein. Learned counsel for the Petitioner has asserted that Respondent No. 2 had commenced Arbitration Proceedings behind his back inasmuch as the letter dated May 21, 1994 had not been received by him. A perusal of this letter will show that no reason has been assigned for the Arbitrator for not having commenced Arbitration Proceedings within fifteen days. Whether this letter was received or not, it was followed by letters dated 29.6.1994, 27.7.1994 and 23.8.1994, receipt of which has not been denied. The Petitioner had requested the Arbitrator for an adjournment due to the illness of the concerned Engineer. On a consideration of these letters it must be appreciated that the Arbitrator had given sufficient opportunity to the Petitioner to prosecute its claims.

6. It is not in dispute that the Arbitrator had dismissed the Reference on the grounds that the Petitioner appeared not to be interested in the Proceedings. In the first place these orders were passed during the pendency of Proceedings before this Court and an inference that the Petitioner was not interested in the proceedings could not reasonably be drawn. Furthermore the Claims of the Petitioner had been forwarded alongwith its letter dated 9.3.1994. These Claims were before the Arbitrator. He ought not to have dismissed the Reference but should have decided and disposed of the Claims on merits. In the absence of the Petitioner having produced any evidence before the Arbitrator by way of substantiating the claim, the Arbitrator may have been justified in passing a Nil Award, if he considered this to be appropriate. He was bound to decide the Claims, one way or the other; he was not justified in dismissing the Reference on the unsustainable reason that the Petitioner was not interested in he arbitral proceedings.

7. In these circumstances I am satisfied that it would be appropriate and just for the Court to accept the petition and exercise his jurisdiction under Section 20. I accordingly appoint Justice J.B. Goel, a retired Judge of this Court, as the Arbitrator. On entering upon the Reference he shall issue notice to the parties. The Petitioner shall be bound to agitate only the claims raised in terms of its letter dated 21.3.1994. He shall be paid a fee of Rs. 5000/- per hearing subject to a maximum of Rs. 50,000/-. The fee of the Learned Arbitrator shall be borne equally by the parties here to pending final decision as to costs by the Arbitrator.

8. The petition stands disposed of. The Respondent shall pay costs of Rs. 2000/- to the Petitioner.