Shri Ashwani Kohli Sole ... vs Municipal Corporation Of Delhi
2006 Latest Caselaw 996 Del

JUDGMENT

Anil Kumar, J.

1. This is a petition under Section 11(6) of the Arbitration and Conciliation Act,1996 by the petitioner for appointment of an arbitrator.

2. The petitioner contended that a work order bearing No. EE-VII/TC/WZ/95- 96/60/9/252 was issued to the petitioner by the Executive Engineer-VII, Opposite Bindra Park, Rajouri Garden, New Delhi-110027.

3. According to the work order placed by the respondent on the petitioner, the work was to commence on 6.7.1995 and was to be completed within three months and consequently the stipulated date of completion was 5.10.1995.

4. The petitioner pleaded that the tender cost of the work order was Rs. 45,865/- only and the petitioner had quoted a rate of 110% above the estimated cost. Subsequently the scope of the work was enhanced from the tendered cost of Rs. 45,865/- to Rs. 2,13,257/-.

5. The allegation of the petitioner is that the respondent did not prepare the running account bill and only a first and final bill for the amounts was to be prepared which was also not prepared. According to the petitioner the first and final bill was to be prepared for net amount after deducting the cost of material and other recoveries and only thereafter the amount due to the petitioner was payable.

6. The petitioner further asserted that recently he came to know that the respondent has prepared the final bill on the basis of the measurement book No. 3742 by the junior engineer Sh. D.C. Bansal. Before the preparation of final bill recently, no intimation regarding preparation of final bill was given nor the amount could be paid to the petitioner.

7. The petitioner has agreed to the amount of final bill which was raised sometime before filing of the present petition for appointment of Arbitrator. The petitioner contended that despite preparing final bill, the amount of which is acceptable to the petitioner, the respondent has neither paid the amount of the final bill prepared by the MCD nor has paid the security deposit, thus raising disputes and entailing invoking the arbitration clause by the petitioner. The arbitration agreement between the parties in terms of Clause 25 of the arbitration agreement is reproduced as under:

Clause 25:- Except where otherwise provided in the contract all questions and disputes relating to the meaning of specifications, design, drawings, instructions and with regard to the quality of workmanship or materials, as used on the work or with regard to or relating to contract designs, drawings, specification, estimates, instructions, orders or these conditions or otherwise concerning the work or the execution or failure to execute the same where arises during the progress of work or after the cancellation, termination, completion or abandonment thereof shall be referred to the Sole arbitration of the Commissioner of the MCD or any other person appointed by him as Arbitrator to adjudicate upon the claim. The decision of the arbitrator with regard to the disputes referred pertaining to the agreement shall be final and binding upon the parties.

8. Since the disputes had arisen between the parties, the petitioner invoked the arbitration agreement and sent a notice dated 10.6.2005 invoking the arbitration agreement and seeking appointment of an arbitrator for adjudication of disputes between the parties.

9. The notice was served on the respondent, however, no reply was given nor in compliance with Clause 25 of the arbitration agreement any arbitrator was been appointed entailing filing of present petition for appointment of arbitrator.

10. After the petition under Section 11(6) for appointment of an arbitrator was filed and notice of the petition was served, no reply has been filed by the respondent nor the arbitrator was appointed within thirty days of service of notice of the present petition in accordance with Arbitration Agreement contained in Clause 25 of the Agreement.

11. The learned Counsel for the respondent states that the reply to the petition was filed, however, the office report states that the reply was returned under objections. Despite opportunity, the reply has not been filed. Consequently, no reply is on record.

12. The learned Counsel for the respondent, however, contended that the petition is barred by time. A copy of the reply alleged to have been filed on behalf of the respondent was perused. From the perusal of reply it transpires that no particulars have been given by the respondent as to when they prepared the final bill entitling the petitioner to claim the amount.

13. The petitioner has contended that the cause of action to file the petition arose on 10th June, 2005. In the circumstances prima facie it cannot be inferred that the petition is barred by time. Whether the claims raised by the petitioner are barred by time or not, can be decided by the Arbitrator.

14. The respondent has not appointed any arbitrator nor any cogent reason has been disclosed for not appointing an arbitrator. The respondent failed to appoint an arbitrator despite invoking the agreement and therefore, they have forfeited the right to appoint an arbitrator in terms of Clause 25 containing arbitration agreement which contemplates that the disputes shall be referred to the adjudication through an arbitrator appointed by the Commissioner Municipal Corporation of Delhi and that the decision of such an arbitrator appointed by the Commissioner shall be final.

15. A learned Single Judge in Haryana Telecom Ltd. v. Union of India and Anr. 112 (2004) DLT 339 : 2004 (3) RAJ 147, had held that since the respondent failed to appoint an Arbitrator within the stipulated time of 30 days of the notice, and even after filing of the petition under Section 11 of the Act, it is for the Court to appoint an Arbitrator. Learned Counsel for the petitioner states that the position is similar in present case also, since in the present case notice was issued to the Respondent on 10.06.2005 and was served on the respondent and despite that no Arbitrator had been appointed.

16. Learned Counsel has also referred to the judgment of the Division Bench of this Court in Delkon (India) Pvt. Ltd. v. G.M., Bharat Heavy Electricals Ltd. (DB), where it was observed in paras 4 and 5 as under:

4. We have given our careful consideration to the arguments advanced by learned Counsel for both the parties. In view of the law laid down in the case of Datar Switchgears Ltd. v. Tata Finance Ltd. and Anr. IV (2000) CLT 191 (SC) : JT 2000 (Suppl. 2) SC 226 it is no more res integra that the vacancy can be supplied by a party pursuant to the arbitration agreement even after thirty days of the receipt of the notice. However, once a party approaches the Court and files a petition for appointment by the designated authority of the Chief Justice of that Court under Section 11(6) of the Arbitration and Conciliation Act, the right to supply vacancy by the opposite party is extinguished. If that right stood extinguished on filing of the petition under Section 11(6) of the Arbitration and Conciliation Act, in September 1998 the appointment of an Arbitrator on 3rd May, 1999 could not be made, therefore in our view, the order passed by the learned Single Judge on 7th May, 1999 suffers from patent illegality. Therefore, the submission of the respondent that the petitioner had appeared before the Arbitrator and the application of the petitioner raising preliminary objections is pending adjudication which inter alia challenges the jurisdiction of the Arbitrator to decide the dispute is of no consequence as from the order reproduced above it was pursuant to the directions passed by the learned Single Judge that the parties were directed to appear before the Arbitrator. The petitioner had no other option but to appear before the Arbitrator and after appearing before the Arbitrator the petitioner has not submitted to the jurisdiction of the Arbitrator, rather has at first opportunity taken the objection that the Arbitrator had no jurisdiction to proceed with the matter.

The learned Counsel for the respondent is unable to show anything as to why the view taken in Union of India v. R.R. Industries (DB) be not followed where it was held that once a party does not supply the vacancy or fails to supply the vacancy before filing of a petition under Section 11(6) of the Arbitration and Conciliation Act, forfeits the right to supply the vacancy in terms of the arbitration clause. What remains is only the arbitration clause, i.e. the dispute has to be resolved under the mechanism of alternative dispute redressal scheme but no right survives to the respondent to supply the named Arbitrator in the arbitration clause.

17. Another single judge of this Court has also followed the ratio of the judgment of Union of India v. R.R. Industries in another matter Sudhir Gensets Ltd. V. Union of India and Anr. . 'Datar Switchgear' was again affirmed by the Apex Court in Punj Lloyd Ltd v. Petronet MHB Ltd. (2006) 2 SCC 638 and it was held that once period of notice had lapsed and the petitioner had moved under Section 11(6) of Arbitration and Conciliation Act, 1996, party having right to appoint arbitrator under arbitral agreement loses the right to do so. There is no reason in the facts and circumstances to differ with the ratio laid down in these cases nor any thing to the contrary has been canvassed before me.

18. Considering the facts and circumstances I, therefore, appoint Mr. D.S. Paweria, retired Additional District Judge, Chamber No. 72, Civil Wing, Tis Hazari Courts, Delhi 110054 (Res: 23932121; 23832121 Cellular 9810433390) as an Arbitrator. The fees of the arbitrator shall be Rs. 5000/- per hearing subject to a maximum of Rs. 40,000/-. Parties are directed to appear before the learned arbitrator on 1.6.2006 at 4 PM.

19. A copy of this order be communicated to the learned arbitrator forthwith. Parties are also directed to communicate the order to the learned arbitrator. Copy of the order be given dusty to the parties.