Mks Projects (India) Ltd. vs Svc Superchem Ltd.
2003 Latest Caselaw 380 Del

JUDGMENT

R.C. Jain, J.

1. The above named petitioner has filed this petition under Section 11 of the Arbitration and Conciliation Act 1996 (in short the "Act") seeking appointment of an Arbitrator in accordance with the terms of the Arbitration Agreement for settling the disputes between the parties which are referred to as claims in the petition.

2. The petition has been made with the averments that the petitioner-company had entered into an agreement dated 15.3.94 for certain work to be executed by the petitioner for the respondent. The said agreement was governed by the terms and conditions contained in the Bid Document DCE:2498-FC.V5-404, in turn containing an Arbitration Agreement in Clause 23. After the execution of the work, disputes and differences arose between the parties. By means of a communication dated 12.4.2001, the petitioner called upon the respondent to invoke the said Arbitration Agreement and to agree to the appointment of a sole Arbitrator out of the three names mentioned in the said communication. However, there was no response from the side of the respondent and hence this petition.

3. Notice of the petition was issued to the respondent who has chosen not to file any reply to the petition and during the course of hearing, learned counsel for the respondent has stated at the Bar that there was no objection from the side of the respondent if an independent Arbitrator (A retired Judge of this Court) is appointed as an Arbitrator and the Arbitral Tribunal so constituted holds its sittings and proceedings at New Delhi as agreed to between the parties.

4. I have heard the counsel for the parties and have given my thoughtful consideration to their respective submissions.

5. Learned counsel for the respondent has disputed that Clause 23 of the document titled as ATV Petro Chem Ltd. to bid for civil works (CBSL) TCE:2498-FCVS-404 is not an Arbitration Clause constituting the Arbitration Agreement and it is Clause 7 as contained in the work order dated 15.3.94 which will govern the scope of Arbitration between the parties. However, this Court on a consideration of the matter, more particularly the stipulation as contained in Clause 13.6 of the order dated 15.3.94, has not hesitation in holding that the terms and conditions as contained in the said ATV Petro Chem Ltd.(Civil works) Bid Document shall apply and govern the Agreement between the parties because this Clause clearly states that all the terms and conditions referred to in the bid document No. TCE-2498-FCV5-404-01 shall apply to this letter of order. In other words the parties had consciously and by reference included the terms and conditions of the bid document and therefore it is crystal clear that for detailed terms and conditions, the terms of conditions contained in the said bid document were meant to be adhered by the parties. Clause 23 of the said bid document No. TCE-2498-FCV-404-01 reads as under:

" In case any dispute or difference shall arise between the owner or the ENGINEER on his behalf and the CONTRACtor touching or concerning this contract or the construction, mooning, operation or effect thereof or of any clause herein contained or as tot he rights, duties or liabilities of the parties hereto respectively or of the ENGINEER under or by virtue of those presents or otherwise or touching the subject matter of those presents or arising out of or in relation hereto (except) as to matters left to the sole discretion of the ENGINNER) the same shall be referred to the arbitration of a single arbitrator in case the parties can agree upon one, otherwise, to two arbitrators, one to be appointed by each party and on umpire to be appointed by the two arbitrators before entering upon the reference and in either case in accordance with end subject to the provisions of the Indian Arbitration Act 1940 or any statutory modification or re-enactment thereof for the time being in force."

6. Mr. Ravi Gupta, learned counsel for the petitioner has strenuously urged that the suggestions made by the respondent in regard to the constitution of the Sole Arbitrator through a retired Judge of this Court will not be in accordance with the above referred Arbitration Agreement between the parties. The submission cannot be said to be devoid of force because it is a settled position that once the parties by Agreement specify and agree to certain procedure to be followed by them, then the said procedure in fact is the only procedure which should be adhered to for the appointment of an Arbitral Tribunal. As would be apparent from the aforesaid Arbitration Clause, the first course is for the appointment of a sole Arbitrator if the parties can agree to one and if they do not agree, then alternatively the second course provided is that both sides can nominate one Arbitrator each and the arbitrators so appointed can nominate an umpire.

7. In the case in hand though the petitioner has called upon the respondent to agree to any one of the three proposed arbitrators named in the communication dated 12.4.01 as the Sole arbitrator but the respondent has failed to exercise their option therefore it can be safely presumed that the respondent are not consenting to the appointment of any of these three persons as a Sole Arbitrator. It would follow that the first limb of the agreement cannot be adhered to and implemented and it is the only alternative course for constituting the Arbitral Tribunal by two arbitrators and one umpire which has to be followed.

8. Learned counsel for the petitioner has strongly submitted that the respondent has forfeited its right to appoint an Arbitrator, once they failed to take action on the communication of the petitioner dated 12.4.01. Strictly speaking this may be the correct interpretation of the Clause and making out a case for invoking the jurisdiction of this Court under Section 11(6) of the Act but counsel for the respondent states that respondent is willing to nominate and Arbitrator from his side within a week.

9. Having considered the matter, this Court is of the opinion on the face of the facts and circumstances as noted above and the offer made by the counsel for the respondent, it would be expedient in the interest of justice if respondent is afforded an opportunity to nominate its Arbitrator within a period of ten days from today. Counsel for the petitioner states that from the side of the petitioner the Arbitrator already named Shri Sanat V. Pandey will be the Arbitrator. This arbitrator along with the arbitrator so appointed by the respondent may nominate an umpire within a period of one month from the receipt of the communication and then the Arbitral Tribunal enter the reference. The Arbitral Tribunal shall hold its proceedings in New Delhi as per the agreement and render the Award as expeditiously as possible. The petitioner stands disposed of accordingly.