Gmr Ambala Chandigarh ... vs Union Of India And Ors
2012 Latest Caselaw 941 Del

           *IN THE HIGH COURT OF DELHI AT NEW DELHI

                                     Date of decision: 10th February, 2012

    +   W.P.(C) 5804/2011

%       GMR AMBALA CHANDIGARH EXPRESSWAYS
        PVT. LTD                   ..... Petitioner
                          Through:     Mr. Milanka Chaudhary & Mr.
                                       Sarojanand Jha, Adv.

                                  versus

        UNION OF INDIA AND ORS                  ..... Respondents

Through: Mr. Jatan Singh, Adv. for UOI.

Ms. Manmeet Arora, Adv. for State of Punjab.

Mr. Pundit Parmanand Katara, Sr. Adv. with Mr. Harikesh Singh, Adv. for R-2 State of Haryana.

CORAM:

HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

[

CM No.1857-1858/2012 (of the respondents no.4&3 respectively, both for modification of order dated 20th September, 2011).

1. These applications have been filed by the respondent no.4 State of Punjab and respondent no.3 State of Haryana respectively both seeking modification of the order dated 20th September, 2011 in so far as directing the said States to in consultation with each other appoint/nominate the same person in the Arbitral Tribunals to be constituted in the matter of disputes with the petitioner and the National Highways Authority of India (NHAI). It is stated that the two States have been unable to agree on the

arbitrator.

2. The counsel for the respondent no.4 State of Punjab has also invited attention to the correspondence exchanged by the petitioner with the respective States to contend that the disputes with the two States are distinct and thus no question of overlapping questions arise and for which reason the direction aforesaid was issued. The senior counsel for the respondent no.3 State of Haryana has also supported the said contention. Both counsels have also contended that their right under their respective agreements with the petitioner to nominate an arbitrator cannot be so circumscribed. It is further contended that the petitioner if of the view that the constitution of Arbitral Tribunal under arbitration clauses in the agreements with respective States should be identical/same, should have at the time of execution of the agreements provided so and the agreements having not provided so, the petitioner cannot now be heard to insist on such a condition.

3. This Bench has in orders dated 11th August, 2011 and 20th September, 2011set out the background and the reasons for which such a direction was issued. Though the counsels for the States had not appeared on 11th August, 2011 but their presence was expressly sought for the aforesaid reason only and the direction issued in their presence. No need is felt to review (which in fact has not even been sought) the said direction especially when the reasons therefor are stated.

4. Though the counsels are correct in contending that ordinarily a right of a party to an arbitration agreement to appoint an arbitrator cannot be so circumscribed but it cannot be lost sight of that the parties to the arbitration in the present case are States and who are expected to be model litigants and not to take pleas which encourage litigation and would be detrimental to early resolution of the disputes. The Supreme Court in State of Maharashtra Vs. Narayan Vyankatesh Despande (1976) 3 SCC 404 held that State which has public accountability in respect of its actions should not defend all claims and even those which are plainly and manifestly correct, thereby dragging the opposite party in unnecessary litigation. Similarly in State of Maharashtra Vs. Admane Anita Moti (1994) 6 SCC 109 it was held that State should behave like an enlightened litigant and not like an ordinary person and ought not to defend cases only because the vanity of a particular officer is hurt. To the same effect is State of Orissa Vs. Orient Paper & Industries Ltd. (1999) 3 SCC 566. The Supreme Court recently in Urban Improvement Trust, Bikaner v. Mohan Lal (2010) 1 SCC 512 reiterated that statutory authorities ought not to raise frivolous and unjust objections, nor act in a callous and high handed manner and cannot behave like some private litigants. It was further held that such bodies are expected to restitute / restore the wrongs committed, upon being found so without requiring unwarranted litigation for the same. Reference may also be made to Dilbagh Rai Jarry v. UOI (1974) 3 SCC 554 & Madras Port Trust v. Hymanshu International (1979) 4 SCC 176. Again in Special Land Acquisition Officer Vs. Karigowda (2010) 5 SCC 708 it was reiterated

that State as litigant has an obligation to act fairly and for the benefit of public at large and to avoid unnecessary litigation.

5. A Division Bench of this Court in Sushil Kumar Raut v. Hotel Marina 121 (2005) DLT 433 also held that though arbitration and the appointment of the arbitrator admits of least judicial intervention but when faced with an impasse and the possibility of the situation if left unattended having consequences of leaving the disputes unresolved, the spirit and intent even of the Arbitration Act requires the Court to pass orders which may not technically or strictly be in tune with the provisions of the Arbitration Act but which would subserve the interest of justice.

6. In so far as the plea of the States of being unable to agree on the same person as their nominee arbitrator is concerned, the same is not acceptable particularly in light of the fact that the two States share the same High Court and the same Judges. Even if they are unable to agree on any other person as a nominee arbitrator of both of them, they can certainly agree on some retired judge for the said purpose.

7. In so far as the plea of the factual disputes in the two arbitrations being different is concerned, the direction which is sought to be modified was issued for the reasons of likelihood of common questions of law being entailed in the arbitration and the different conclusions if any reached by different Arbitral Tribunal being detrimental to early resolution of disputes.

8. The senior counsel for the respondent no.3 State of Haryana has also argued that the said direction could not have been issued without the petitioner challenging the clause in the arbitration enabling the State to nominate any person as the arbitrator. The said contention cannot also be accepted. The argument of the counsel for the petitioner as recorded in the order dated 11th August, 2011 was that the remedy of arbitration provided in the agreements was not an efficacious alternative remedy owing to the duplicity which will be entailed in the said course of action. It was to meet the said contention that the direction was issued.

9. The senior counsel for the respondent no.3 State of Haryana has also contended that the arbitrator so imposed on the State, contrary to the will of the State will not be able to represent the interest of the State. The said agreement suffers from legal fallacy. The arbitrator is not expected to be an agent of the party appointing the said arbitrator and is expected to decide the disputes referred for arbitration impartially and without any bias towards the party nominating/appointing him/her. No merit is found in the said contention also.

10. No case for modification of the order is thus made out. Dismissed.

RAJIV SAHAI ENDLAW, J

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