The Upper India Couper Paper Mills ... vs Union Of India (Uoi)
2006 Latest Caselaw 727 Del

JUDGMENT

Anil Kumar, J.

1. This order shall dispose of petitioner's petition under Section 20 of the Arbitration Act, 1940 for appointment of arbitrator and reference of disputes between the parties to him.

2. The brief facts to comprehend the disputes between the parties are that the petitioner is a limited company incorporated under the Companies Act, 1956. Respondent through Central Purchase Organization used to issue orders and place rate contract for the indents for the goods required by the Central Government, State Government, Corporations etc.

3. The petitioner had been obtaining orders from the respondent and in the process petitioner received a rate contract No. COS-9/RC-4/9249/UIC/102/PAOD dated 16.9.1975. Petitioner therefore made supplies against the said rate contract and submitted the final bill for a sum of Rs.84,139.65/-.

4. The respondent, however, did not make the payment and withheld the amount contending that they also have claims against the petitioner for different rate contracts issued in the year 1968 to 1971.

5. There is an arbitration agreement between the parties and on agreement being invoked by the petitioner the reference was made to the arbitration in respect of disputes and differences regarding the different rate contracts issued in the year 1968 to 1971. Mrs. R. Lakshamanan was appointed as a sole arbitrator in case No. 79-B/85.

6. The petitioner contended that she resigned as an arbitrator on 19.9.1985 and Dr. B.N. Mani was appointed as a sole arbitrator in her place on 27.3.1986. The averment of the petitioner is that he filed a statement of claim in the arbitration case relating to the different contracts of 1968 to 1971 and claimed release of the withheld amount including Rs. 84,139.65. In the reply filed by the Union of India it was admitted that an amount of Rs.84,139.65 has been withheld from the bills of the supply order No. 20 dated 20.9.1975 issued against R/C No. COS-9/RC-4/9249/UIC/102/PAOD dated 16.9.1975.

7. The arbitrator made and published an award dated 27.10.1987. He allowed other claims of the petitioner, however, did not adjudicate the claim pertaining to refund of Rs. 84,139.65/- pertaining to the above noted agreement dated 16.9.1975 holding that it was beyond the scope of reference. Since the dispute regarding payment of amount of Rs. 84,139.65/- remained un-adjudicated, petitioner filed a suit No. 2223A/89 for reference of disputes and appointment of an arbitrator pertaining to this claim for Rs. 84,139.65/- with interest.

8. The said petition was disposed of by order dated 5.3.1992 whereby the court directed for appointment of an arbitrator in terms of Clause 24 of the contract within two months from the date of the order. The order dated 5.3.1992 which was passed reads as under:-

5-3-1992

Present: Mr. H.L. Raina for the petitioner

Mr. B.P. Aggarwal for the respondent.

Suit No. 2223A/87

Parties Counsel state that there is an arbitration agreement and that disputes and differences have arisen between the parties within the ambit and scope of the arbitration agreement and both have prayed that the petition may be allowed and the disputes and differences in question may be referred to arbitrator, as prayed for. Consequently, the petition under Section 20 of the Arbitration Act is hereby allowed and the disputes and differences as detailed in the petition are hereby referred to the arbitrator to be appointed by the Director General of Supplies and Disposals who shall do so in terms of Clause 24 of the Contract. The arbitrator shall be appointed within two months from the date of this order. Parties are left to bear their own costs.

9. Pursuant to the reference of dispute by order dated 5.3.1992 the respondent appointed Mr. R.K. Gupta as an arbitrator. The said arbitrator, however, resigned. Before the arbitrator resigned the petitioner had filed his claim, however, the respondent had failed to file any counter claim and reply to the claim of the petitioner.

10. Thereafter petitioner asserted that he again gave notices dated 4.10.2001 for the arbitration proceedings when the respondent in their reply dated 15.10.2001 contended that they do not have any record and as per them this claim of the petitioner had been decided in Suit No. 2223A/89. On failure of the respondent to appoint an arbitrator the present petition has been filed seeking appointment of arbitrator in respect of arbitration agreement contained in rate contract No. COS-9/RC-4/9249/UIC/102/PAOD dated 16.9.1975.

11. The petition is contested by the respondent contending that they do not have the records available as the matter is very old. The respondent also contended that one more arbitration case No. o4-N/2000 for recovery of Rs. 2,53,098.83/- was filed and in that case an award was made in favor of petitioner and payment of Rs. 5,25,564/- has already been made to the petitioner on 24.11.2000 and the case has been finally settled. The respondent contended that this implies that after the payment of above said amount the dispute pertaining to Rs. 84,139.65/- brought by the petitioner to be included in the arbitration case in respect of dispute of Rs. 43,470/- as an additional reference, however, while making and publishing the award dated 27.10.1987 it was indicated by the arbitrator that refund of Rs. 84,139.36/- did not pertain to the contract in question and was beyond the scope of reference and, therefore, the learned arbitrator did not make any award and in the circumstances the respondent has claimed dismissal of the petition.

12. I have heard the learned Counsel for the parties in detail and have perused the petition and the reply filed by the respondent.

13. During the course of the agreement the parties have relied on a letter reference No. PP-5/TWL-9/102 dated 9.3.2006. By said letter by virtue of Clause 24 of the agreement the Directorate General (Supplies and Disposals) has nominated and appointed Dr. Gita Rawat, Additional Legal Advisor to the Government of India in the Ministry of Law having its office in Room No. 03, 1st Floor, Jeevan Tara Building, Parliament Street, New Delhi as a sole arbitrator to hear and determine the said disputes and differences so far as they are referable to arbitration.

14. While appointing the arbitrator it has also been observed that the arbitrator is appointed under the Arbitration and Conciliation Act, 1996 and under the terms of the contract the venue of arbitration shall be the office of the Directorate General of Supplies and Disposals, New Delhi. The learned Counsel for the petitioner contended that appointment of arbitrator Dr. Gita Rawat, Additional Legal Advisor to the Government of India is acceptable to the petitioner and the disputes regarding payment of Rs. 84,139.65 and interest thereon be referred to her, however, it was contended that appointment of the arbitrator cannot be under the Arbitration and Conciliation Act, 1996. The learned Counsel for the petitioner has relied on decisions of this Court in the cases of Delhi Development Authority v. Bhai Sardar Singh and Sons FAO(OS) 93 of 2002 decided on April 20th, 2004; M/s Minny Enterprises v. General Manager, I.T.D.C. FAO (OS) No. 348/2003 decided on July 28th, 2004 and Milk Food Limited v. GMC Ice Cream Pvt. Ltd. .

15. I have considered the contention of the petitioner and the authorities relied on by the appellants. The provisions of Arbitration and Conciliation Act, 1996, nowhere provides or mandates that the re-enacted Act or law would automatically apply to pending arbitration proceedings or that the old Act would automatically be not applicable and the rights, if any, accrued to the parties would also be negated. In the case of M/s Minny Enterprises (Supra) it had been held that where the arbitration petition had already been commenced new Arbitration and Conciliation Act, 1996 will not apply nor the rights which had accrued to the parties under the old Act would be negated. In Milk Food Limited (Supra), it was held that under the Arbitration Act, 1940, an arbitration is deemed to have commenced when one party to the arbitration agreement serves on the other a notice requiring the appointment of an Arbitrator. It was further held that for the purpose of applicability of the 1940 Act, service of a notice for appointment of an Arbitrator would be relevant date for the purpose of commencement of the arbitration proceeding and if the date of notice is prior to the date of enforcement of Act of 1996, the Arbitration Act, 1940 would apply. The Supreme Court held:

72. Keeping in view the fact that in all the decisions, referred to hereinbefore, this Court has applied the meaning given to the expression ?commencement of the arbitral proceeding? as contained in Section 21 of the 1996 act for the purpose of applicability of the 1940 Act having regard to Section 85(2)(a) thereof, we have no hesitation in holding that in this case also, service of a notice for appointment of an arbitrator would be the relevant date for the purpose of commencement of the arbitration proceedings.

16. In the facts of the petitioner, the claim was for appointment of Arbitrator and reference of disputes to him was raised much prior to coming into force, The Arbitration and Conciliation Act, 1996. The petition under Section 20 of the Arbitration Act for the appointment an Arbitrator after the respondent failed to appoint an arbitrator initially.

17. The petitioner had invoked the arbitration agreement for appointment of arbitrator and reference of disputes under the Arbitration Act, 1940 much prior to coming into force The Arbitration and Conciliation Act, 1996. In the circumstances, the provisions of The Arbitration Act, 1940 shall apply to Arbitration proceedings between the parties for which respondent has appointed Dr. Geeta Rawat as a sole arbitrator.

18. Therefore petition is allowed. Dr. Gita Rawat, Additional Legal Advisor to the Government of India, Ministry of Law, Room No. 03, 1st Floor, Jeevan Tara Building, Parliament Street, New Delhi is appointed as the sole arbitrator and the disputes as referred to in the petitions are referred to her. A copy of this order be communicated to the arbitrator. Parties are also directed to give a copy of the order to the arbitrator. dusty to the parties. With these observations the petition is disposed of.