Sh. Anil Katyal vs Municipal Corporation Of Delhi
2007 Latest Caselaw 2278 Del

JUDGMENT

Anil Kumar, J.

1. This is a petition under Section 11 of the Arbitration Act, 1996 for appointment of arbitrator in terms of arbitration agreement between the parties as the disputes have arisen.

2. The notice of the petition was issued to the respondent, however, despite various opportunities given to the respondent, reply has not been filed and consequently the pleas and averments raised by the petitioner has not been denied by the respondent.

3. The contention of the petitioner is that a notice inviting tender bearing No.14/1 was issued by the Executive Engineer (Pr.), South Zone, Sewa Nagar, New Delhi for the work of 'Widening and Improvement of Mehrauli-Badarpur Road from Qutab to Khirki, Masjid Road, X-ing Part I, Phase III - Sub Head: Widening of carriage way opposite CISF camp'.

4. The petitioner has contended that he is a registered municipal contractor. Pursuant to the notice inviting tender, the petitioner furnished the relevant documents and after perusal of the documents, a tender form was issued by the respondent, Executive Engineer. The petitioner quoted rates and his rates were the lowest amongst all the contractors and as such work order bearing No.EE(Pr.)/TC/99-2000/69 dated 25th February, 2000 was issued to the petitioner. The work was to be started under the work order from 6th March, 2000 and it was to be completed within six months. The stipulated date of completion was 5th September, 2000, however, the work was completed by the petitioner within a period of 8' months, i.e., on 20th November, 2000.

5. The petitioner contended that the delay in execution of the work was attributable to the respondent as it was decided by the respondent officials to provide a slip road in order to facilitate the merging of traffic coming from West End Marg, Saidullajab Village with a new carriage way of M.B. Road. According to the petitioner, the delay was on account of additional work which was executed by the petitioner and for this additional work the time ought to have been extended for completion of work by the respondent.

6. On completion of work, the petitioner has raised the final bill which amount has not been paid and consequently the disputes have arisen between the parties. Since there is an Arbitration agreement between the parties for adjudication of the disputes by an Arbitrator in terms of Clause 25 of the agreement, the petitioner invoked the same. Clause 25 of the agreement containing the arbitration agreement is as under:

Clause 25:

Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions herein before mentioned and as to the quality of workmanship or materials used on the work or as to any other question claim, right matter or thing whatever in any way arising out of or relating to the contract designs, drawings, specifications, estimates instructions order or these conditions or otherwise concerning the work of execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment shall be referred to the Sole Arbitrator of the person appointed by the Commissioner, MCD at the time of dispute or the administrative Head of MCD at the time of such appointment. It will be no objection to any such appointment that the Arbitrator so appointed is a Govt. Servant, had expressed views on all or any of the matter in dispute or difference. The Arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason, the reason, the Commissioner or administrative head as aforesaid at the time of such transfer vacating of office or inability to act, shall appoint another person to act as Arbitrator in accordance with the terms of the contract, such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor, it is also a term of this contract that no person other than a person appointed by Commissioner or administrative Head of MCD as aforesaid should act as Arbitrator and if for any reason that is not possible, the matter is not to be referred to arbitration at all. In all cases where the amount of claim in dispute n Rs.25,000/- (Rupees twenty five thousand) only and above the Arbitrator shall give the reason for the award.

Subject as aforesaid the provisions of the Arbitration Act 1940, on any statutory modification of re-enactment, thereof and the rules made there under and for the time being in force shall apply to the arbitration proceedings under this clause.

It is a terms of the contract that the party invoking arbitration shall specify the dispute or disputes to be referred to the arbitration under this clause together with the amount of amounts claimed in respect of each such dispute.

It is also a term of the contract that if the contractor(s) do/does not make any demand for arbitration in respect of any claim(s) in writing within 90 days of receiving the intimation from the Corporation or any officer authorized in this behalf that the bill is ready for payment the claim of the contractor will be deemed to have been waived and absolutely barred and the Corporation shall be discharged and released of all liabilities under the contract in respect of these claims.

The Arbitrator(s) may from time to time with consent of the parties enlarged the time for making and publishing the award.

The decision of the Superintending Engineering regarding the quantum of reduction as well as justification thereof in respect of rates for sub-standard work which may be decided to be accepted will be final and would not be open to arbitration.

7. The petitioner gave a notice dated 12th January, 2006 demanding appointment of arbitrator in terms of arbitration agreement which communication was sent by registered post and under postal certificate. No reply to the notice was given. Thereafter, the petitioner has filed the present petition and despite opportunities given, the respondent has failed to file any reply and in any case has failed to appoint an arbitrator within 30 days from the receipt of the notice invoking the arbitration agreement and even before filing the present petition. Further contention of the petitioner is that the original agreement was not given to him and the petitioner also sought production of original agreement which has not been produced by the respondent. In the circumstances, the plea of the petitioner is that there is an arbitration agreement in terms of Clause 25 cannot be refuted.

8. The learned Counsel for the respondent has contended without filing any reply that the labor reports have not been filed by the petitioner which has entailed the delay in making the payments of the bills raised by the petitioner. The learned Counsel for the respondent is, however, unable to explain as to how appointment of an arbitrator could be withheld on this ground by the respondent.

9. 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 if the respondent fails 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. A Division Bench of this Court in Delkon (India) Pvt. Ltd. v. G.M., Bharat Heavy Electricals Ltd. , relying on Datar Switchgears Ltd v. Tata Finance Ltd has held in para 4 is 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.

10. In Union of India v. R.R. Industries also 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, such a party forfeits the right to supply the vacancy in terms of the arbitration clause and 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. Thus the arbitrator was to be appointed before the filing of the petition and since no arbitrator has been appointed by the respondent consequently, the respondent has lost its right to appoint the arbitrator in terms of Clause 25 of the arbitration agreement.

11. Considering the facts and circumstances, I appoint Shri S.M. Chopra, Advocate, (Additional District Judge, Retd.),181, Deshbandhu Apartment, Kalkaji, New Delhi-110019 (Mob: 9213230349, Res.:26484158) as an Arbitrator. The fee of the arbitrator shall be Rs.70,000/- which shall be borne by the petitioner in the first instance. Parties shall appear before the Arbitrator on 17th December, 2007 at 4.30 PM. Registry to send a copy of this order to the Arbitrator forthwith. Parties are also directed to intimate the Arbitrator about the order. Copies of this order be also given to the parties dusty.