M/S Shree Ram Buildwell Pvt Ltd vs I & Fc Department
2013 Latest Caselaw 385 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                   Judgment Reserved on: January 22, 2013
                                    Judgment delivered on: January 28, 2013

+                            Arb.P.No.326/2012

       M/S SHREE RAM BUILDWELL PVT LTD             ..... Petitioner
                    Through  Mr.Avinash K.Trivedi, Adv.
                    versus

       I & FC DEPARTMENT                                   ..... Respondent
                     Through            Mr.V.K.Tandon, Adv. with
                                        Mr.Durgesh Hooda, Adv.
       CORAM:
       HON'BLE MR. JUSTICE MANMOHAN SINGH

MANMOHAN SINGH, J.

1. The petitioner, M/s Shree Ram Buildwell Pvt. Ltd. has filed the present petition against the respondent, I & FC Department, Govt. of NCT of Delhi, under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an impartial arbitrator to adjudicate upon the dispute between the parties.

2. It is alleged by the petitioner that the petitioner has executed the work after 4th January, 2011 of an amount of `17,50,000/- out of which the respondent has recorded the measurement in MB and paid `14,56,000/-. The balance amount of the work of `2,94,000/- is not recorded and paid by the respondent. Despite of legal notice sent under Clause 25 of the agreement to the Executive Engineer of the respondent on 5 th May, 2012, no reply was received by the petitioner. The petitioner sent another notice in terms of Clause 25 to the Superintending Engineer of the respondent on

4th June, 2012 who has also not given the reply to the said notice. After the expiry of the said notice period, the petitioner yet sent another notice dated 2nd July, 2012 to the Chief Engineer-I of the respondent who has sent his reply. The contention of the petitioner is that since the respondent has failed to appoint the arbitrator within the stipulated period of notice, thus, this Court may appoint an alternative arbitrator.

3. In the reply sent by the respondent to the legal notice of the petitioner, the case of the respondent is that no payment is due to the petitioner, as no further work has been carried out as alleged by the petitioner. Whatsoever work was carried out by the petitioner, it has already been paid. No dispute exists and all the claims of the petitioner are fabricated and baseless. The petition has been filed with malafide intention and to extract money from the public funds. Therefore, the present petition was filed by the petitioner.

4. It appears from the earlier orders dated 17th October, 2012 and 3rd December, 2012 that time was sought by the respondent to obtain the instructions from the department for appointment of an arbitrator. On 3rd December, 2012 when the matter was listed, learned counsel for the respondent has placed on record a letter dated 21 st January, 2013 issued by the Chief Engineer (I&FC) Zone-I, informing that under Clause 25 of the Agreement, Sh.K.K.Verma, Retired Addl. DG (CPWD) has been appointed as a sole Arbitrator to decide and make his award regarding the claims/ disputes raised by the petitioner as mentioned in the petition as well as counter-claims of the respondent.

5. In the case of Union of India and Another vs. M.P.Gupta, reported in (2004) 10 Supreme Court Cases 504, the Supreme Court has passed the following order:-

"1. The appellants and the respondent herein entered into a written agreement on 17-8-1994 for execution of work for supplying and staking hand-broken (hard stone) ballast conforming to Northern Railway, Chief Engineer's Circular No. 170/P.Way along cess/toe from km 1/0 to km 50/0 and in ballast depot at Mandor as per Northern Railway Standard Specifications and Special Tender Conditions in connection with JU-JSM BG Conversion Project. It appears disputes and differences arose between the parties in relation thereto as a result whereof the respondent herein filed an application under Section 20 of the Arbitration Act, 1940 for appointment of the arbitrator in terms of clause 64 of the agreement. A learned Single Judge of the High Court allowed the said application and appointed Justice P.K. Bahri as the sole arbitrator. It was an ex parte order. Aggrieved, the appellants preferred an appeal before the Division Bench of the High Court, which was dismissed. Against the said judgment and order, the appellants are in appeal before us.

2. Shri N.N. Goswami, learned Senior Counsel appearing for the appellants urged that in view of clause 64 of the agreement which provides that only two gazetted railway officers of equal status are to be appointed as arbitrators, no person other than the two specified persons could be appointed as arbitrator. We find merit in this submission.

3. The relevant part of clause 64 runs as under:

"64. Demand for arbitration. --

(3)(a)(ii) Two arbitrators who shall be gazetted railway officers of equal status to be appointed in the manner laid in clause 64(3)(b) for all claims of Rs 5,00,000 (Rupees five lakhs) and above, and for all claims irrespective of the amount or value of such claims if the issues involved are of a complicated nature. The General Manager shall be the sole judge to decide whether

the issues involved are of a complicated nature or not. In the event of the two arbitrators being undecided in their opinions, the matter under dispute will be referred to an umpire to be appointed in the manner laid down in sub-clause (3)(b) for his decision.

(3)(a)(iii) It is a term of this contract that no person other than a gazetted railway officer should act as an arbitrator/umpire and if for any reason, that is not possible, the matter is not to be referred to arbitration at all."

4. In view of the express provision contained therein that two gazetted railway officers shall be appointed as arbitrators, Justice P.K. Bahri could not be appointed by the High Court as the sole arbitrator. On this short ground alone, the judgment and order under challenge to the extent it appoints Justice P.K. Bahri as sole arbitrator is set aside. Within 30 days from today, the appellants herein shall appoint two gazetted railway officers as arbitrators. The two newly appointed arbitrators shall enter into reference within a period of another one month and thereafter the arbitrators shall make their award within a period of three months."

6. In view of the aforesaid reasons as the respondent has now appointed the Arbitrator, nothing survives in the present petition. The same is accordingly disposed of.

(MANMOHAN SINGH) JUDGE JANUARY 28, 2013/ka