Delhi High Court

M/S Geo Miller And Cross Objector. ... vs Municipal Corporation Of Delhi on 3 February, 2011

Author: V.K.Shali

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+               ARB.P. NO.275/2010

                                      Date of Decision : 03.02.2011

M/S GEO MILLERAND CROSS OBJECTOR. PVT. LTD.
                                    ...... Petitioner
                     Through: Mr.S.D.Singh, Advocate.

                          Versus

MUNICIPAL CORPORATION OF DELHI       ...... Respondent

Through: Mr.O.P.Saxena, Adv. for respondent no.2.

AND

ARB.P.NO.276/2010

M/S GEO MILLER AND CROSS OBJECTOR. PVT. LTD.

...... Petitioner Through: Mr.S.D.Singh, Advocate.

Versus

MUNICIPAL CORPORATION OF DELHI ...... Respondent Through: Mr.Jitendra Kumar, Adv.

for MCD.

Mr.O.P.Saxena, Adv. for respondent no.2.

CORAM:

HON'BLE MR. JUSTICE V.K. SHALI

1. Whether Reporters of local papers may be allowed to see the judgment? NO

2. To be referred to the Reporter or not ? NO

3. Whether the judgment should be reported in the Digest ? NO

V.K. SHALI, J. (oral)

1. The learned counsel for the respondent no.2 seeks further

time to obtain instructions. The request for the same is

disallowed as the respondent no.2 has already been given

more than sufficient time to obtain instructions or

alternatively file reply.

2. I have heard the learned counsel for the parties and perused

the record.

3. These are petitions filed by the petitioner under Section 11(6)

of the Arbitration and Conciliation Act, 1956 (hereinafter

referred to as an „Act‟) for appointment of an Arbitrator.

4. Briefly stated the facts as averred in the petition are that the

petitioner(s) was awarded a contract known as the „2 MLD

Sewage Treatment Plant at Holambi, Delhi (under Yamuna

Action Plan)‟ vide agreement dated 28.11.2001. The value of

the total contract was fixed at `1,27,70,000/-. The scope of

the work as per the agreement was clearly mentioned to be as

„build, operate and transfer of 2 MLD Capacity Sewage

Treatment Plant at Squarter Resettlement Colony Tikri

Khurd, Delhi (under Yamuna Action Plan)‟ (Annexure P-1). It

is alleged that the petitioner was given the job to operate and

maintain the said plant for a period of five years starting

from 1.2.2003 to 31.1.2008, and having performed his part of

the obligation of commissioning, operating and maintaining

the plant, the petitioner was entitled to get the necessary

payment w.e.f. 1.2.2003.

5. It is alleged by the petitioner that the last amount which was

received by the petitioner was to the tune of `1,44,493/- on

6.8.2007 while as an amount of `41,40,000/- was still due

and payable. On account of this non-payment of the

amount, the petitioner in terms of Clause 25 of the

Agreement wrote a letter to the Superintending Engineer for

settlement of dispute and requested him to release the

aforesaid amount vide letter dated 6.3.2010 (annexure P-2).

6. It is alleged that the Executive Engineer sent an irrelevant

query on 25.3.2010 and made allegations against the release

of payment. On 16.4.2010, the petitioner personally met the

Chief Engineer and filed an appeal in terms of the aforesaid

clause. However, the Appellate Authority namely, the Chief

Engineer, failed to take a decision within 30 days from the

date of filing of appeal which expired on 15.5.2010. It is

alleged by the petitioner that as the petitioner failed to get

any redressal in terms of Clause 25 of the Agreement by

approaching firstly, the Superintending Engineer and then

the Chief Engineer, he was constrained to issue notice dated

10.6.2010 to the competent authority namely, The Municipal

Commissioner, MCD for appointment of an Arbitrator.

7. In the representation, the petitioner had formulated the

question with regard to his grievance and the same were

reiterated in the notice dated 10.6.2010 as required by the

Clause 25 of the Agreement between the parties. The relevant

portion of the said clause reads as under:-

"It is a term of this contract that the party invoking arbitration shall give list of disputes with amounts claimed in respect of each dispute along with the notice for appointment

of arbitrator and giving reference to the rejection by the Chief Engineer of the appeal"

8. Since the respondent/MCD failed to appoint the arbitrator in

terms of Clause 25 of the agreement within 30 days, the

petitioner was constrained to file the present petition on

16.9.2010 for appointment of an arbitrator.

9. The petition came to be listed on 01.10.2010 when notice was

directed to be issued to the Municipal Commissioner, MCD.

10. The learned counsel for the MCD had put in appearance on

11.1.2011 and stated that the Government of NCT of Delhi

had issued a notification according to which w.e.f. 30.8.2010,

the work pertaining to „Slum and JJ Department‟ which was

previously being looked after by the MCD was shifted to Delhi

Urban Shelter Improvement Board under Section 31 of the

Delhi Urban Shelter Improvement Board Act, 2010. In terms

of the said notification, it was urged that the Delhi Urban

Shelter Improvement Board (hereinafter referred to as „Board‟)

was the successor body of the MCD dealing with the contract

in question. It was alleged that the Board may be made as a

party and the respondent no.1 has nothing to do with the

same. A copy of notification has been placed on record. The

petitioner impleaded the Board as respondent no.2 and

accordingly, notice was issued to the Chairman of the Board

also.

11. Mr.O.P.Saxena, learned counsel for the Board appeared on

13.1.2011 and sought time to obtain instructions. Further

time was sought on 20.1.2011 when the matter was directed

to be listed on 3.2.2011.

12. Today again, a request for adjournment has been made,

which has already been turned down. There is no dispute

about the fact that the petitioner had entered into the

contract with the then MCD to build, operate and transfer of

the Sewage Treatment Plant in question and in terms of

Clause 25 of the Agreement, in the event of the grievance of

the petitioner being not adjudicated by the Superintending

Engineer or by the Appellate Authority, the petitioner could

invoke the Arbitration Clause and accordingly, the Municipal

Commissioner was competent to appoint the Arbitrator. The

petitioner had formulated the disputes with regard to his

grievance in the appeal to the Appellate Board, yet the appeal

was not considered within the period of 30 days as envisaged

in the agreement and accordingly, this necessitated the

issuance of notice dated 10.6.2010 to the Municipal

Commissioner.

13. By the learned counsel for the MCD or even for the Board, it

has not been disputed that notice has been issued to them.

The MCD has filed an affidavit to the effect that w.e.f.

30.8.2010 the Board has been constituted and work in

question has been transferred to the Board. The learned

counsel for the Board has neither filed reply nor obtained

instructions with regard to the appointment of an Arbitrator

by the Court. Further, they have even failed to appoint an

Arbitrator. The aforesaid facts clearly show that at the time

when the disputes were raised, the work pertaining to Sewage

Treatment Plant was being dealt with by the „Slum and JJ

Department‟ which was an integral part of the MCD and

therefore, the Municipal Commissioner in terms of Clause 25

of the Agreement, was entitled to appoint an Arbitrator.

According to the averment made, notice dated 10.6.2010 was

sent to the Municipal commissioner, the receipt of which has

not denied by the MCD or by its successor body i.e. the

Board. Therefore, if a reasonable time is excluded for the

service of the notice, it would be assumed that notice was

delivered to the Municipal Commissioner, MCD on or about

12/13 July, 2010 and the Municipal Commissioner was

under an obligation to appoint an Arbitrator within 30 days

from the date of receipt of the said notice. This period of 30

days had lapsed on 12/13 August, 2010 while as the Board

has been constituted on 30.8.2010. Therefore, it was

essentially for the MCD to appoint an arbitrator in terms of

Clause 25 of the Agreement. So far as the disputes are

concerned, they were formulated by the petitioner in the

appeal, which are being reproduced hereinunder:-

" List of Disputes The crux of the disputes between our company and department are being mentioned herein below:

A) Whether the MCD can be justified in not making the payment due and payable to M/s Geo Miler and Co. Pvt. Ltd. arising out of

Contract 2 MLD Sevage Treatment Plant at Holambi bearing agreement no.67/EE (S) DDI/2001-02 dated 28.11.2011. B) Presently a sum of Rs.41.40 lacs along with interest @18% since 1.3.2010 is payable to Geo Miller and Co. Pvt. Ltd. and details whereof are given herein below:-

1) Capital Cost With held in Civil Works 1.16 With held in Mechanical Works 1.67 Security Deposit 1.33 4.16

2) Operation & Maintenance Charges From Sept. 06 to Jan. 08 9.75 Deductions from O & M Bills 10.12 Reimbursement of Service tax 1.46 Reimbursement of WCT 1.30 Retention /Security Deposit 0.64 23.27

3) Interest

On capital cost from 1.3.03 to 28.2.10 5.24 i.e. 7 yrs. @ 18% P.A. on 4.16 lacs On O & M from 1.2.08 to 28.2.10 i.e. 25 months @18% P.A. on 23.7 lacs 8.73 13.97 Total of (1+2+3) 41.40"

14. In view of the aforesaid facts, section 11 (6) of the Act clearly

lays down that:

"Where, under an appointment procedure agreed upon by the parties--

a) a party fails to act as required under that procedure; or

b) ............

c) ............

a party may request the Chief Justice or any person or institution designated by him to take the necessary measures, unless the agreement on the appointment procedure provides other means for securing the appointment."

15. It is pertinent here to mention that relying on the judgment

rendered in Datar Switchgears Ltd. vs. Tata Finance Ltd. & Anr. (2000) 8SCC 151, it was observed by the Supreme Court in Union of India vs. Bharat Battery Manufacturing Co. (P) Ltd. (2007) 7 SCC 684 that

"Once a party files an application under S.11 (6), the other party extinguishes its right to appoint an arbitrator in terms of clause of agreement."

the light of the abovementioned judgments, the

respondent/MCD which was a necessary as well as a proper

party ought to have got an arbitrator appointed latest by

12/13 August, 2010 in furtherance of the notice issued to

them. Since this is not been done till date, either by the MCD

or even by the Board (successor body) which had been given a

reasonable opportunity to appoint an Arbitrator, both of them

are deemed to have forfeited their right to appoint an

Arbitrator in terms of section 11(6) of the Act.

15. I accordingly, allow the petition and appoint Sh. S. M.

Chopra, the learned Additional District Judge (Retired) as the