Pragati Construction ... vs Union Of India
2021 Latest Caselaw 2696 Del

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*     IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                            Date of decision: 28.09.2021

+     ARB.P. 685/2021
      PRAGATI CONSTRUCTION CONSULTANTS                         ..... Petitioner
                         Through       Mr.Sumit Bansal, Adv.

                         versus

      UNION OF INDIA                                        ..... Respondent
                    Through            Mr.J.K. Singh, Standing Counsel for
                                       Railways with Mr.Amit Kumar, Adv.

      CORAM:
      HON'BLE MR. JUSTICE SURESH KUMAR KAIT

                          J U D G M E N T (oral)

1. The relief sought in the present petition before this Court is to appoint

sole Arbitrator under Section 11(6) of the Arbitration and Conciliation Act,

1996 to adjudicate the disputes between the parties in accordance with

clause 63 and 64 of the General Conditions of the Contract, 2014.

2. It is stated by the petitioner that respondent vide letter dated

03.05.2016 had awarded the work of extensive repairs and complete

renovation of old washing line nos.3, 4 & 5 including assembling and

linking of track and other allied works at Coach Care Centre, Hazrat

Nizammuddin at New Delhi. The total cost of work at the accepted rates was

worked out at Rs.12,07,05,992.60/-. The stipulated date of completion of

work was 15 months from the date of issuance of acceptance letter. Thus, in

the present case, the stipulated date for completion of work was 02.08.2017.

3. It is contended by the petitioner that immediately upon the award of

work, petitioner fully mobilized at the site and constructed the labour

hutments which was duly confirmed vide letter dated 07.05.2016 issued to

the respondent. During the execution of the work, respondent got various

extra items executed at the site but failed to make complete payments

towards the work done to the petitioner. Consequently, petitioner could not

complete the work within the extended time period due to non-availability of

funds by the respondent.

4. Learned counsel for the petitioner submits that on 05.11.2019,

petitioner invoked arbitration in terms of clause 64 of the General

Conditions of the Contract and requested the Chief Engineer/Construction of

the respondent to consider the claim for arbitration and further on

30.07.2020 petitioner issued a letter regarding the losses/claims of the

petitioner and requested for appointment of Arbitrator in terms of clause 64

of the General Conditions of Contract.

5. Respondent did not take any steps for a period of more than 4 months

and then for the very first time, on 19.01.2021 issued a letter to petitioner

wherein it was stated that for the appointment of sole arbitrator/arbitral

tribunal, Clause of Section 12(5) & 31(5) of the Arbitration and Conciliation

Act, 1996 should be waived off but petitioner refused to waive off the same

and again requested for appointment of the Arbitrator by the competent

authority.

6. Vide letter dated 09.03.2021, respondent had nominated a panel of

four retired railway officers, not below the rank of Senior Administrative

Grade Officers to suggest at least two names out of the panel and thereafter,

respondent shall appoint one out of them to act as the nominee of the

Petitioner. Petitioner vide its letter dated 24.03.2021 had responded to the

letter dated 09.03.2021, stating that appointment of the nominee by the

respondent as co-arbitrator is bad in the eyes of law as it is contrary to the

law laid down by the Hon'ble Supreme Court in the case of Perkins

Eastman Architects DPC & Anr. Vs. HSCC (India) Ltd.: (2019) SCC

OnLine SC 1517 wherein it has been categorically stated that "person who

has interest in the outcome or decision of the dispute must not have the

power to appoint a sole arbitrator" and further requested to refer the dispute

to The Delhi International Arbitration Centre, New Delhi for the

appointment of sole and independent arbitrator.

7. However, respondent had again reiterated its contentions as stated in

letter dated 09.03.2021 and sought consent of the petitioner for appointment

of the Arbitrator as clause 64 of General Conditions of Contract does not

contemplate for the appointment of an outside arbitrator.

8. At the hearing, learned counsel for petitioner submits that petitioner

has already invoked arbitration vide notice dated 05.11.2019 and for claim

of Rs.4,64,65,000/- (Rupees Four Crores Sixty Four Lacs Sixty Five

Thousand), an Arbitrator is required to be appointed by this Court.

9. Respondent has filed a short counter affidavit to the petition wherein

it has been stated that contractor has given "no claim certificate" against the

contract at the time of passing of final bill for the work executed. As per

Clause 43(2) of Indian Railways Standard General Conditions of Contract,

2018, if a contractor submits "no claim certificate" then the demand of

arbitration shall not be considered. He has placed reliance upon the

judgment of Hon'ble Supreme Court Union of India vs. Onkar Nath Bhalla

& Sons: (2009) 7 SCC 350.

10. In the case of Vidya Drolia vs. Durga Trading Corpn. (2021) 2 SCC

1, it was held that even where there is a disputed no-claim certificate or a

plea of discharge of the liability on the ground of novation or accord and

satisfaction is raised, the matter should appropriately be referred to the

Arbitral Tribunal and that it is only where, "it is manifest that the claims are

ex facie time barred and dead or there is no subsisting dispute" that the

Court can, at the referral stage, refuse to refer the matter to arbitration. The

judgment also states that the appropriate course to be followed by the Court

in all cases would be to refer the matter to arbitration, even where a plea of

non-arbitrability of the dispute is raised except where the dispute is

manifestly in the nature of "deadwood", meaning, thereby, that reference to

arbitration would be a futile exercise.

11. Pertinently, allocation of work order vide respondent's acceptance

letter bearing No.74-W/4/1/WA/SE Rd dated 03.05.2016 and invocation of

arbitration by petitioner vide notice dated 05.11.2019 is not disputed.

12. A coordinate bench of this Court in the case of M/s ABC EXPERTS

AND ENGINEERS vs. UNION OF INDIA in ARB.P. 170/2021 vide order

dated 11.08.2021 has passed an order wherein the matter was referred to the

Delhi International Arbitration Centre for adjudication of the disputes after

considering the objections by both the parties.

13. Considering the facts of the present case and the decision taken by a

coordinate bench of this Court and Apex Court in the abovementioned cases,

I am of the opinion that to resolve the disputes between the parties, an

independent arbitrator is required to be appointed.

14. Accordingly, Mr. Justice (Retd.) Satpal Garg (Mobile:

9910384627) is appointed as sole Arbitrator to adjudicate the disputes

between the parties.

15. The arbitration shall be conducted under the Delhi International

Arbitration Centre (DIAC). The fee of the Arbitrator shall be in accordance

with the schedule of fees prescribed under the Delhi International

Arbitration Centre (DIAC) (Internal Management) Rules and Delhi

International Arbitration Centre (Administrative Cost and Arbitrators' Fees)

Rules, 2018.

16. The learned Arbitrator shall ensure compliance of Section 12 of

Arbitration and Conciliation Act, 1996 before commencing the arbitration.

17. The present petition is accordingly disposed of.

18. A copy of this order be sent to the learned Arbitrator for information.

(SURESH KUMAR KAIT) JUDGE SEPTEMBER 28, 2021 ab