Sml Isuzu Limited vs Delhi Metro Rail Corporation
2011 Latest Caselaw 3402 Del

*            THE HIGH COURT OF DELHI AT NEW DELHI
%                                   Judgment delivered on: 18.07.2011

          Arbitration Petition No. 27/2011 & IA No.7842/2011

SML ISUZU LIMITED                             ..... Petitioner
                Through: Mr Meet Malhotra, Sr. Adv. with
                         Mr Mayank Mishra, Mr Ravi S.S.
                         Chauhan and Mr Ranjan Mukherjee,
                         Advs.

                                     versus


DELHI METRO RAIL CORPORATION                 ..... Respondent

Through: Mr Shiv Kumar, Adv.

CORAM:-

HON'BLE MR JUSTICE MANMOHAN SINGH

1. Whether Reporters of local papers may be allowed to see the judgment ?

2. To be referred to the Reporter or not ? Yes

3. Whether the judgment should be reported in Digest ? Yes

MANMOHAN SINGH, J

1. The petitioner has filed the present petition under Section 11

(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to

as the Act) for constitution of Arbitral Tribunal.

2. The parties had agreed on a procedure for appointing the

Arbitrators as contemplated by Section 11 (2) of the Act according to

which the respondent was required to furnish to the petitioner a panel of

five engineers out of which each party was required to choose one

arbitrator each and the two so chosen arbitrators were to choose the third

arbitrator from the said list, who was to act as the Presiding Arbitrator.

The said arbitration clause of the contract dated 16.06.2009 is

reproduced as under:

"2600. Arbitration

2601. If conciliation fails, then such disputes or differences, whatsoever arising between the parties, arising out of touching or relating to manufacture, measuring operation or effect of the Contract or the breach thereof shall be referred to arbitration in accordance with the following provisions:

i. Matters to be arbitrated upon shall be referred to a Sole Arbitrator where the total value of claims does not exceed Rs.1.5 million. Beyond the claim limit of Rs.1.5 million, there shall be three Arbitrators. For this purpose Employer will make out a panel of engineers with the requisite qualifications and professional experience. This panel will be of serving or retired engineers of Government Departments or of Public Undertakings;

ii. For the dispute to be decided by a Sole Arbitrator, a list of three engineers taken from the aforesaid panel will be sent to the Contractor by the Employer for which the Contractor will choose one;

iii. For the disputes to be decided by three Arbitrators, the employer will make out a list of five engineers from the aforesaid panel. The Contractor and Employer shall choose one Arbitrator each and the two so chosen shall choose the third Arbitrator from the said list who shall act as the presiding Arbitrator."

3. The case of the petitioner is that the agreement dated

16.06.2009 was illegally terminated by the respondent and thereafter

petitioner earlier moved an application under Section 9 of the Arbitration

and Conciliation Act, 1996 in this Court on 20.09.2010, being OMP

No.554/2010. In the said proceedings, during the hearing on

18.10.2010, this Court directed the respondent to communicate the date,

time and venue for conciliation meeting to the petitioner to enable them

to take the decision for the said purpose. Subsequently, vide letter dated

26.10.2010 the respondent communicated to the petitioner that the said

meeting shall take place on 25.11.2010. The conciliation meeting ended

with no amicable resolution of the disputes between the parties and vide

order dated 14.12.2005, the Court disposed of the petition under Section

9 of the Act. The operative portion of the said order reads as under:

"....In view of clause 2600 obtaining between the parties, Mr. Shiv Kumar says that he shall supply a panel of five qualified persons, in terms of the said clause to the petitioner within one week from today. On such an information being supplied, the petitioner shall choose his nominee-arbitrator, likewise the respondent would do the needful. As provided the two nominees will choose the third arbitrator. This exercise shall be completed no later than two weeks from today. After the constitution of the arbitral tribunal in accordance with clause 2600 of the agreement obtaining between the parties, the captioned petition will be moved by the petitioner before the arbitral tribunal either in the present form or in the modified form to bring it in conformity with the provisions of the Arbitration Act. The Arbitral Tribunal shall adjudicate upon the remaining reliefs, i.e. prayer clause (b) and (c) referred to in the captioned application ...."

4. It is submitted by the respondent that as per order dated

14.12.2010 the respondent had supplied to the petitioner a panel of five

qualified engineers as per letter dated 21.12.2010 but petitioner failed

and neglected to nominate any one out of the said panel as its Arbitrator.

5. According to the petitioner, there is not a single person who

possesses the requisite qualification as provided in clause 2600 to

adjudicate the present dispute pertaining to the matter. Therefore, the

prayer of the petitioner is that the independent arbitrator be appointed by

the Court.

6. It is also stated that the names were just repetition of the

names which were given by the respondent prior to the passing of the

order dated 03.12.2010 in the field of mechanical engineering nor had

any professional experience as engineer in automobile industry therefore,

they cannot be independent and impartial. The petitioner had

communicated all the above to the respondent vide letter dated

24.12.2010. Similar is the position of another panel of arbitrators, the list

of which was sent on 07.01.2011.

7. The learned counsel for the respondent has referred to the

letter dated 21.01.2011 wherein the petitioner had agreed that the panel

must be comprised of persons possessing mechanical/automobile

engineering background and should be well versed with the law relating

to breach of contract and damages and in view of the letter issued by the

petitioner on 21.01.2011, the respondent by last letter dated 02.05.2011

gave the names of persons who have experience of mechanical

engineering since very long time. The educational qualification is also

given.

8. The names of the persons, their qualification as well as work

experience are as under:

S. No.   Name of Arbitrators            Educational Qualification    Work Experience

1.       Mr. Anil Madan,                B.E. (Mechanical Engg.)- Joined Indian Railways
         Retired Director (Technical)   AMIE (A) & (B)           through Indian Railways
         RITES.                                                  Service of Mechanical

Flat No.701 Tower 6, Engineers in 1972. From Uniworld Gardens, Sohna 1972 to 1993 served with Road, Sector 47, Gurgaon- Indian Railways as class-I 122018 officer on various senior E-mail position in Mechanical [email protected] Engineering field. From Mobile +919871664433 1993 to 2009 served with M/s RITES as Director/Technical.

2. Mr. Jaswinder Marwaha, Degree in Mechanical Joined Indian Railways Retired ED/RITES, Engineering from Institue through Indian Railways Flat No.2A, Aravali View, of Mechanical Engineering, Service of Mechanical Rail Vihar, Sector 56, U.K. Engineers in 1972. From Gurgaon-122003, 1972 to 2004 served with Mobile-+919810397892 Indian Railways as class-I officer on various senior position in field of Mechanical Engineering field. From 2004 to 2008 worked with M/s RITES as Executive Director in the field of Mechanical Engineering.

3. Mr. N.P. Singh, BE (Mech.) Joined Indian Railways Retired Sr. Ex. Dir Mech through Indian Railways Engg 1425A, B-1 Vasant Service of Mechanical Kunj, New Delhil-110070. Engineers in 1967. From E-mail 1967 to 2003 served with [email protected] Indian Railways as class-I Mobile 9818778371 officer on various senior position in the field of Mechanical Engineering.

4. Mr. S.M. Bhardwaj, Degree in Mechanical Joined Indian Railways Retired General Manager Engineering from Institue through Indian Railways Diesel Locomotive Works of Mechanical Engineers, Service of Mechanical (DLW) E-25, Jangpura London. Engineers in 1971. From Extension, New Delhi, 1971 to 2009 served with E-mail Indian Railways as class-I [email protected] officer in the field of Mobile +919650663081 Mechanical Engineering.

                                                                Retired     as    General
                                                                manager,           Diesel
                                                                Locomotive        Works,
                                                                Varanasi.

5.      Mr. R.K. JAIN               Chartered      Mechanical Joined Indian Railways
        Retired GM/DLW              Engineer from London      through Indian Railways
        B-708, Rail Vihar, Sector                             Service of Mechanical

15-II, Gurgaon-122001 Engineers in 1961. From E-mail 1961 to 1997 served with [email protected] Indian Railways as class-I Tele : 2300771 officer on various senior Mobile 9818452795 position in the field of Mechanical Engineering.

                                                              Retired     as    General
                                                              manager,           Diesel
                                                              Locomotive        Works,
                                                              Varanasi.

9. When the parties have entered into a contract and settled on a

procedure, due importance has to be given to such procedure. The court

has to respect the terms of the contract entered into by parties and

endeavour to give importance and effect to it, when the party has not

disputed the arbitration clause, normally it is bound by it and the

procedure laid down under the said clause.

10. It is settled law that the court must ensure that the procedure

provided for is exhausted through. It is not mandatory for the Chief

Justice or any institution designated by him to appoint the named

arbitrator(s), however, no doubt, due regard has to be given to

the qualification prescribed by the agreement. In the present case, the

respondent provided the third list on 02.05.2011 in view of the letter sent by

the petitioner on 21.01.2011 which is fully satisfactory as per the requirement

of petitioner. In case, the petitioner still has any disagreement, then it would

be taken that it is not willing to abide by the arbitration agreement.

11. Since there is an agreed procedure for the appointment of

arbitrator, the same can be appointed only in accordance with the said

procedure and this Court can grant indulgence in the appointment only if any

of the contingencies laid down under Sub-Section 6 have arisen. In the

present case no such contingency has ever arisen and as such there are no

grounds for deviating from the agreed procedure and this Court also can

appoint the arbitrator only as per the said agreed procedure.

12. The last list of panel of arbitrators has the names of the persons

who are qualified with degrees obtained and have vast experience. Thus,

under these circumstances, further plea of the petitioner cannot be accepted.

The petitioner is directed to choose the panel of arbitrators from the list

supplied by the respondent vide its letter dated 02.05.2011 and inform the

respondent within the period of 30 days. In case of failure, the respondent is

at liberty to appoint a panel of arbitrators and communicate to the petitioner.

The present petition as well as the pending application stand disposed of with

these directions. No costs.

MANMOHAN SINGH, J JULY 18, 2011/jk