Madhava Hytech-Rani(Jv) . vs The Managing Director Ircon ...
2014 Latest Caselaw 3221 Del

$~23
*IN THE HIGH COURT OF DELHI AT NEW DELHI
+                         Arb. P. 5/2014
%                      Judgement Reserved on: 15th July, 2014
                       Judgement pronounced on: 21st July, 2014


MADHAVA HYTECH-RANI(JV)               ..... Petitioner
                Through :             Ms. Geeta Luthra, Sr. Adv.
                                      with Mr.N.Raja Raman,
                                      Mr. R.D. Torora,
                                      Mr. Subrata Das, Advs.

                          versus

THE MANAGING DIRECTOR IRCON INTERNATIONAL
LTD & ANR                  ..... Respondent
                 Through : Mr. Shankar Kumar Jha,
                           Adv.



CORAM:
HON'BLE MS. JUSTICE DEEPA SHARMA


JUDGMENT

1. The present petition has been filed under Section 11 of the

Arbitration and Conciliation Act, 1996 (hereinafter referred to as

"the act") for appointment of an arbitrator to adjudicate upon the

disputes between the parties arising out of an agreement dated

20th June, 2007.

2. The case of the petitioner is that on 27th September, 2010,

the respondents terminated the contract with the petitioner. On

the same date, the petitioner approached the Patna Civil Court in

OS No. 584/2010 on 28th September, 2010 and sought declaration

of termination of the contract by respondents to be null and void.

However, in November, 2012, the petitioner withdrew the said

suit. Vide a letter dated 27th October, 2012, the petitioner invoked

its right under clause 72.2.3 of the contract to resort to method of

arbitration for resolution of their dispute. The respondents,

however, failed to appoint an Arbitrator. The petitioner has also

submitted that they had also filed a Company Petition for

recovery of dues under Section 433 of the Companies Act. On

these facts, it has been prayed that an Arbitrator be appointed for

resolution of all disputes between the parties.

3. A short counter affidavit is filed by the respondents. It is

submitted that the arbitration invocation letter dated 27 th October,

2012 of the petitioner was duly replied by the respondents vide

their letter dated 11th February, 2013, wherein in terms of

arbitration clause 72.2.3 of General Conditions of Contract

(GCC), the respondents formed a panel of three arbitrators asking

the petitioner to choose any two of them so that one of them

could be appointed as an arbitrator by them. The said letter was

properly addressed and duly served upon the petitioner. The

petitioner has not acted on the letter of the respondents and has

not selected and intimated the two names from panel of

arbitrators. It is submitted that the petitioner had themselves filed

copy of the letter dated 5th April, 2013 of the counsel for the

respondents, a reply to statutory notice of petitioner under Section

433 of the Companies Act. In the letter dated 5 th April, 2013, the

counsel for the respondents had clearly mentioned that the

invocation letter dated 27th October, 2012 of petitioner was duly

replied by respondents vide its letter dated 11th February, 2013. It

is submitted that the said letter, therefore, was within the

knowledge of the petitioner at the time of filing of the present

petition and still this fact was concealed from the knowledge of

this court. It is submitted that the respondents had done the

needful as per the arbitration clause 72.2.3. It is further submitted

that a procedure for appointment of an Arbitrator had been

provided in clause 72.2.3 of the agreement and it is the petitioner

who has failed to complete the required procedure. It is submitted

that the respondent has not defaulted anywhere.

4. The petitioner has filed the rejoinder. In the rejoinder, the

petitioner has again denied the receipt of the letter dated 11 th

February, 2013 and has denied that it was served or sent as per

the procedure prescribed under general clause act and other

provisions of the law.

5. I have heard the arguments of learned counsel of both the

parties and perused the record.

6. There is no dispute to the fact that vide letter dated 27th

October, 2012, the petitioner had invoked the arbitration clause

No. 72.2.3. Para 6 of the said communication reads as under:-

"6 Therefore, we hereby invoke clause 72.2.3 of the contract to resolve our disputes through arbitration. As an impartial award is not expected from a sole arbitrator from IRCON, arbitration by a tribunal of three arbitrators as per Arbitration and Conciliation Act, 1996 may be appointed in the matter. You are requested to nominate your arbitrator to proceed further."

7. The petitioner has invoked the jurisdiction of this court

under Section 11 of the Arbitration and Conciliation Act, on the

ground that the respondents had failed to appoint the arbitrator.

Section 11 (6) (a) of Arbitration and Conciliation Act reads as

under:-

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

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

8. It, therefore, is clear that this court under Section 11 (b) (a)

has the jurisdiction to appoint an arbitrator as and when party

fails to act as required under the agreed procedure for

appointment of arbitrator. In this case, the procedure for

appointment of arbitrator was agreed by parties in terms of clause

72.2.3 of agreement.

9. Clause 72.2.3 of the agreement prescribes the procedure

for appointment of Arbitrator and reads as under:-

Clause 72.2.3

"Managing Director of the Employer may himself act as Sole Conciliator/Sole Arbitrator of may at his option appoint another person as Sole conciliator or Sole Arbitrator, as the case may be. In case, Managing Director of the Employer decides to

appoint a Sole Conciliator/Sole Arbitrator, then a panel of at least three names will be sent to the Contractor. Such persons may be working/retired employees of the Employer who had not been connected with the work. The Contractor shall suggest minimum two names out of this panel for appointment of Sole Conciliator/Sole Arbitrator. Managing director of the Employer will appoint Sole Conciliator/Sole Arbitrator out of the names agreed by the Contractor".

10. It is clear from para 6 of the communication dated 27th

October, 2012, that the petitioner has deviated from the procedure

agreed upon between the parties for appointment of arbitrator. On

the other hand, the respondents have placed on record its

communication dated 11th February, 2013 in response to the

petitioner's letter dated 27th October, 2012. The respondents in

the letter has suggested three names, out of which one could act

as an Arbitrator and the petitioner was called upon to suggest two

names from the said panel. The respondents have placed on

record this letter along with the courier receipt.

11. The petitioner in his rejoinder has denied the receipt of this

letter. It is apparent that this letter has been issued by the

respondents much before the filing of the present petition.

Although, the petitioners have disputed the receipt of this

communication, however, certain facts in the form of documents,

belie the contention of the petitioner that this letter was not

received by them. The fact that the petitioner had filed a company

petition against the respondents is an admitted fact. The

respondents have placed on record the record of the said company

petition and the Index of papers submitted by the petitioner with

that company petition includes reply dated 5th April, 2013 by

counsel for the respondents, a reply to statutory notice of petition

under Section 433 of the Companies Act. This letter dated 5th

April, 2013 has a reference of the letter of the respondents dated

11th February, 2013, which was sent by respondents to the

petitioner in response to their letter dated 27th October, 2012. The

present petition has been filed on 26th October, 2013. It, therefore,

is clear that on the date of filing of the present petition, the

petitioner was aware of the fact that the respondents had

constituted an Arbitral Tribunal Panel of three persons and had

asked the petitioner to choose any two names from the said panel

for the appointment of one Arbitrator. Besides that, the

respondents have also placed on record the copy of the letter

dated 11th February, 2013 which was duly sent and received by

the recipient.

12. In view of these facts, I am not inclined to accept the

contention of the petitioner in the rejoinder as well as in the

arguments that the said letter has not been received by the

petitioner. The agreement provides that the Arbitrator shall not be

connected with the work in question and it is not the case of the

petitioner that any of the members of the Arbitral Tribunal Panel

suggested by the respondents in their communication dated 11th

February, 2013 are connected with the work in question. In the

communication dated 27th October, 2012, while invoking the

arbitration clause 72.2.3, the petitioners have claimed that they do

not expect an impartial award from the sole arbitrator.

Undisputedly petitioner had entered into the contract with

respondents on 27th June, 2007 and the terms of agreement

contain the clause 72.2.3. Meaning thereby, they themselves had

agreed to the appointment of sole arbitrator in terms of clause

72.2.3. Their apprehension of not getting an impartial award is

unfounded. The Arbitrator could be a working/retired employee

but not connected with the awarded work to the petitioner. The

Petitioners also have remedy under Section 12 & 13 of the Act, in

case they doubt the impartiality of the appointed arbitrator.

13. I find no merit in this petition and the same is dismissed

with the observation that the petitioner can still respond to the

respondents letter dated 11th February, 2013.

14. The petition is disposed of in the above terms.

15. No order as to costs.

(DEEPA SHARMA) JUDGE JULY 21 , 2014 j