Delhi High Court
Bharat Heavy Electricals Ltd. vs Frontier Civil Contractor ... on 2 May, 2006
Author: S K Kaul
Bench: S K Kaul
JUDGMENT
Sanjay Kishan Kaul, J.
I.A. No. 4536/2001 (Under sections 30 and 33 of the Arbitration Act, 1994)
1. The respondent/contractor was awarded the work of construction of 88 houses at NTPC Vidyut Nagar district Ghaziabad in pursuance to an agreement dated 1.5.1989. The agreement contained an arbitration clause. Dispute arose between the parties resulting in termination of contract on 27.10.1989. At repeated requests of the respondent, the petitioner appointed Shri P.P.Chander, General Manager of the petitioner as a sole arbitrator as per the letter dated 27.4.1992.
2. The arbitrator entered upon a reference on 22.6.1992 and the respondent filed his claim. The petitioner also filed a counter claim to which the respondent had an objection on the ground that there was no reference of such counter- claim. The arbitration proceedings were at an advanced stage when Shri P.P. Chander retired and the petitioner was not willing to extend the time period for Mr. P.P. Chander to conclude the arbitration proceedings. The respondent was thus constrained to file OMP No. 23/1995 under Section 28 of the Arbitration Act, 1940 (hereinafter as 'the said Act'). The proceedings were pending when the petitioner sought to appoint Sh. M.K. Kaushik, Deputy General Manager of the petitioner as the sole arbitrator. However, in terms of the Order dated 16.4.1996 Mr. V.R. Vaish, former Director General of CPWD was appointed with the consent of the parties as the sole arbitrator 'to adjudicate upon the disputes, claims and counter-claims of the parties'. The arbitrator entered upon reference and has made his award dated 30.9.1998. The respondent aggrieved by the same, filed the present application under Sections 30 and 33 of the said Act.
3. Learned counsel for the respondent has made a two fold submission. The first submission is that the counter-claim was never referred for arbitration and the respondent had taken a specific objection in this behalf. The objection emanates from the arbitration clause which itself provides that the reference is to be made to the sole arbitration of the General Manager or his nominee. However, the pre-condition to the same is 'shall after written notice by either party to the contract to the other party'. The submission of the learned Counsel for the respondent is that there was never any such written notice and thus, there could not have been any reference to the arbitrator and this issue ought to have been examined by the arbitrator.
4. The arbitrator while examining this issue has relied upon Order passed in OMP No. 23/1995 and has considered the Order as the reference of the counter-claim of the petitioner to the award. Learned counsel for the petitioner naturally contends in favor of upholding the view taken by the arbitrator.
5. On examination of the records it is apparent that the respondent had continued to press the objection about the lack of arbitrability of the counter-claim. The respondent was constrained to approach the Court in OMP No. 23/1995 only to seek extension of the time for making and publishing the award to be made by Mr.P.P.Chander. However, while examining this question of extension, Mr.V.R.Vaish was appointed as the replacement arbitrator to Mr.P.P.Chander. It appears that the use of the phraseology by the Court 'to adjudicate upon the disputes, claims and counter-claims of the parties', was as per the normal routine and not as per a concession made by the learned Counsel for the respondent that the respondent was giving up the objection to the arbitrability of the counter-claim. Thus the arbitrator was required to examine the objection of the respondent on merits and could not have treated the Order passed in OMP No. 23/1995 dated 16.4.1996 as an additional reference by the Court to the arbitrator of the counter-claim.
6. The second plea of the learned Counsel for the respondent arises on account of there being no finding by the arbitrator on the specific objection raised by the respondent that the counter-claim was in any case barred by time. The contract was terminated on 27.10.1989 while the counter-claim was filed for the first time on 2.11.1992. The plea of the learned Counsel for the respondent is and was that the counter-claim was beyond the period of three years from the cause of action and thus was barred by time, in view of the Judgment of this Court in Mehta Teja Singh and Co. v. Delhi Development Authority and Anr. Arbitration Law Reporter 1994(1) 326. It is not disputed that this plea was raised and pressed by respondent. The proceedings of the arbitrator held on 20.2.1998 as the 21st sitting as also the 22nd sitting on 19.3.1998, taken note of the objections of the respondent as well as fact that certain Judgments were referred to by the learned Counsel for the respondent. Despite this fact there is no finding recorded in the award for or against the respondent in respect of this plea. Learned counsel for the petitioner is unable to point out from the award any such finding and cannot seriously dispute that the arbitrator has failed to give any finding on this plea of limitation in respect of the counter- claim.
7. The result of the aforesaid is that the award in so far as the counter-claim is concerned cannot be sustained and is liable to be set aside and remanded back to the arbitrator for fresh adjudication. The result of the adjudication of the counter-claim would naturally have an effect on the final award to be made and published now, since the petitioner has not filed any objection in so far as the award of the claims in favor of the respondent are concerned. The final finding of the arbitrator has resulted in a net amount being payable by the respondent as a consequence of counter-claim being awarded in part. Learned counsel for the respondent further sates that in view of the last paragraph of the award, part of the amount has even been realized by the petitioner on account of the encashment of one of the bank guarantees. The arbitrator would have to examine this aspect while making the award afresh in respect of the counter-claim.
8. In view of the aforesaid the application is allowed. CS(OS)No. 2512-A/1998
9. In view of the IA. No. 4536/2001 being allowed, the matter is remanded back to Shri Mr. V.R. Vaish, sole arbitrator, S-19, Panchsheel Park, New Delhi for fresh adjudication of the counter-claims of the petitioner in terms aforesaid.
10. It is agreed that only two pleas raised aforesaid are required to be re- considered by the arbitrator and the matter does not have to be re-examined on merits otherwise.
11. The arbitrator will fix his own fee and would naturally fix a reasonable amount taking into consideration the fact that the matter is being remanded back to the arbitrator in the aforesaid facts and circumstances.
12. The suit stands disposed of.
13. A copy of the Order be sent to the arbitrator without process fee expeditiously by the Registry.
14. dusty to learned Counsel for the parties.
