S.S. Jetley vs Dda & Anr.
2000 Latest Caselaw 772 Del

ORDER

Vikramajit Sen, J.

1. This is an Arbitration Application filed under Section 11(6) of the Arbitration and Conciliation Act, 1996. It has been averred that on the arising of the disputes between the parties, the Arbitration Clause was invoked by the Petitioner in terms of its letter dated 22.7.1998. A reminder was sent to the persona designata for the appointment of an Arbitrator on 25.8.1998. Hence the jurisdiction of this Court was invoked.

2. Even the filing of the petition has not galvanised the DDA to take immediate action in appointing an Arbitrator. Instead, it has displayed its obduracy in contesting the petition, has filed a Reply to the Claims under disputes and has prayed that the petition may be dismissed. At the time of final hearing, after the petition has needlessly blocked precious and scarce judicial time for almost two years, learned counsel for the DDA has submitted that Shri Som Dev, S.E. (Arbn) II, DDA has now been appointed as the Arbitrator.

3. The conduct that the Respondent has demonstrated is behaviour that does not behave a Statutory body. It has deliberately delayed the appointment of the Arbitrator and has compelled the Applicant to initiate and prosecute litigation before this Court. 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".

4. 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, and 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.

5. The appointment of Shri Som Dev, S.E. (Arbn.) II, DDA is set aside and the disputes between the parties are referred to the Sole Arbitration of Hon'ble Mr. 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. 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 hereto pending final decision as to costs by the Arbitrator.

6. The petition is disposed of accordingly. I am optimistic that with the present appointment of an Arbitrator by the Court, thereby removing the unreasonably belated appointment/nomination by the Respondent, it shall henceforward act with the expedition and promptness that should be manifested by it.

7. The Petitioner shall be entitled to. Rs. 2000/- as costs of this petition