Ahluwalia Contracts (India) Ltd. vs Indira Gandhi Centre For The Arts ...
2011 Latest Caselaw 3624 Del

         THE HIGH COURT OF DELHI AT NEW DELHI

                       Arb. Petition No.79/2010

                      Judgment pronounced on: 29.07.2011

AHLUWALIA CONTRACTS (INDIA) LTD.        ......Petitioner
              Through: Mr. Ashish Bhagat, Adv. with
                       Mr. Abdhesh Chaudhary, Adv.

                      Versus

INDIRA GANDHI CENTRE FOR THE ARTS (IGNCA)
                                       .....Respondent

Through: Mr. Naveen Sharma, Adv.

CORAM:-

HON'BLE MR JUSTICE MANMOHAN SINGH

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

2.    To be referred to Reporter or not?                 Yes

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

MANMOHAN SINGH, J

1. The petitioner, an Engineering Constructions Company

registered under the Companies Act, 1956 has filed the present petition

under Section 11 of the Arbitration & Conciliation Act, 1996

(hereinafter referred to as „the Act‟) for appointment of a substitute

arbitrator so as to reconstitute the Arbitral Tribunal to adjudicate the

disputes between the parties.

2. The brief facts of the case are that the respondent is a trust

for the promotion of art and culture under the patron of Ministry of

Information and Broadcasting of the Government of India, having its

registered office at Janpath, New Delhi.

3. A Contract No.012 dated 15.02.1999 was entered into

between the parties for construction of Sutradhara & underground

parking-B civil works at IGNCA, Janpath, New Delhi. The

construction work was to be completed within the stipulated period of

30 months i.e. by 02.09.2001. The contract dated 15.02.1999 also

contained the Arbitration clause at Point 3.25.0.

4. As per the petitioner, due to inordinate delay in releasing

the funds for the project, a dispute arose between the parties because

of which the execution of project work suffered and the Arbitration

clause was invoked. Therefore, the petitioner, vide its letter

No.ACIL/GNCA/2002/777 dated 23.09.2002, appointed Shri. H.C.

Gupta, (Retd.) Chairman Sales Tax Appellate Tribunal, as the

Arbitrator for and on their behalf and also called upon the respondent

to appoint their arbitrator as per the terms of the arbitration clause of

the contract dated 15.02.1999. However, the respondent did not

appoint any arbitrator, therefore, on 10.02.2005 the petitioner filed an

Arbitration Application No.35 of 2005 under section 11(4)(a) of the

Act and during the pendency of the said application, the respondent

appointed Mr. B.S. Gupta, Engineer-in-Chief (Retd.) PWD as their

arbitrator on 17.03.2005. Thereafter, the said application was disposed

of by order dated 24.11.2005, wherein Justice M.L. Varma, a retired

Judge of this High Court was appointed as the third Arbitrator.

5. During the course of the arbitration proceedings, the

petitioner was directed to file the requisite documents along with the

compilation of claim-VII pertaining to "De-watering" which was the

subject matter of the arguments on the 32nd sitting of the arbitration

proceedings held on 21.01.2010. Therefore, on the 33rd sitting when

all the requisite documents had been filed by the petitioner, one of the

Arbitrators Mr. B.S. Gupta pointed out that in compilation of papers

filed by the petitioner, there was a remark on page 18 that "de-

watering stopped as per claimant's letter as per the instructions of

Mr. B.S. Gupta and Sarvate" he stated that this is basically a letter

from the manager (Projects) of the petitioner to Mr. H.K. Yadav,

Senior consultant of the respondent. Thereafter, Mr. B.S. Gupta stated

that he would like to recuse from the matter and declined to hold the

proceedings. Therefore, the matter was adjourned sine die on that day

for the parties to take a call.

6. Vide letter dated 05.02.2010 addressed to all the

concerned, the petitioner agreed to the recusal of Mr. B.S. Gupta from

the arbitration proceedings stating that since de-watering was the most

contentious issue between the parties and since Mr. B.S. Gupta had

already expressed his views on the said issue, it would be just and

expedient that the petitioner agrees to the recusal of Mr. B.S. Gupta.

After the recusal of Mr. B.S. Gupta, the Presiding Arbitrator Mr. M.L.

Varma directed the counsel for the respondent to nominate another

person as an arbitrator so that the arbitration proceedings may

continue.

7. It is submitted by the petitioner, that as per the terms of the

agreement the respondent was bound to nominate another person as its

Arbitrator after the recusal of Mr. B.S. Gupta form the arbitration

proceedings. However, as the respondent failed to nominate its

arbitrator, the petitioner filed the present application for appointment

of an arbitrator from the respondent‟s side so that the arbitration

proceedings may be started without any further delay.

8. It has been submitted on behalf of the respondent, that Mr.

B.S. Gupta, the co-arbitrator appointed by them has agreed to continue

as the co-arbitrator in the Arbitral Tribunal and has given his consent

afresh vide letter dated 24.02.2010. Therefore no grievance remains,

and thus the Arbitral Tribunal may be directed to proceed further from

the stage already left.

9. I have heard both the parties and have carefully and

meticulously gone through the material placed on record.

10. It is not denied by the respondent that Sh. B.S. Gupta Co-

Arbitrator who was appointed by the respondent as their nominee

became upset from the proceeding of the Tribunal held on 22.01.2010

and expressed his intention to recuse from the matter. Thereafter, on

05.02.2010 the petitioner wrote a letter to Presiding Arbitrator

appreciating the fairness of Mr. B.S. Gupta and requested that the

respondent be asked to appoint another Arbitrator in his place. The

presiding Arbitrator also wrote a letter dated 14.02.2010 to Mr. Gupta

expressing his thanks for the contribution during the course of

proceedings. It was only after that the respondent wrote a letter dated

17.02.2010 informing the Co-Arbitrator the implication of his

withdrawal as well as the inconvenience to be caused to the

respondent because of his withdrawal.

11. Therefore, Mr. Gupta wrote a letter dated 24.02.2010

stating that no grievance survives and gave his consent as a Co-

Arbitrator.

12. After having considered the facts and circumstances of the

present case, this court is of the view that due to peculiar facts and

circumstances of the matter, it would be appropriate to appoint a

substitute Arbitrator in place of Mr. B.S. Gupta as the respondent has

not appointed the Arbitrator on its behalf even after the expiry of a

period of thirty days. The present petition is, therefore, allowed to the

extent that in place of Mr. B.S. Gupta, a substitute Arbitrator be

appointed by the Delhi High Court Arbitration & Conciliation Centre

as per its rules. However, the prayer of the petitioner to reconstitute

the Arbitral Tribunal cannot be allowed.

13. After appointment of another Arbitrator in place of Mr.

B.S. Gupta, the Arbitral Tribunal shall give prior notice to the parties

before commencing the proceedings.

14. The petition is accordingly disposed of with these

directions with no order as to costs.

15. A copy of the order be sent to Delhi High Court Arbitration

Centre.

MANMOHAN SINGH, J JULY 29, 2011 dp