M/S Dogra Construction Company ... vs State Of Himachal Pradesh & Others
2022 Latest Caselaw 11774 HP

    IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA

                        Arbitration Case No. 191 of 2022
                        Decided on 30th December, 2022
    ____________________________________________________




                                                                          .

    M/s Dogra Construction Company Private Limited .....Petitioner.
                                       Versus





    State of Himachal Pradesh & others     ......Respondents.
    _____________________________________________________
    Coram
    The Hon'ble Mr. Justice A.A. Sayed, Chief Justice





    1
     Whether approved for reporting?
    ____________________________________________________

    For the petitioner:                   Mr. Mohit Dogra, Advocate.

    For the respondents: Mr. Yudhvir Singh Thakur, Deputy
                         Advocate General.

    A.A. Sayed, Chief Justice (oral)

This is an Application filed by the petitioner under

Section 11(6) of the Arbitration and Conciliation Act, 2019 ( 'the Act'

for short), seeking appointment of an independent Arbitrator to

adjudicate the disputes and differences between the parties.

2. Pursuant to a tender issued by the respondents, the

applicant was allotted the work of "providing sewerage scheme to

Dalhousie Town in District Chama (H.P) (Sub Head-laying, jointing &

Testing of D.I Pipe 150 mm Dia and 200 mm Dia K-7 including

Whether reporters of Local Papers may be allowed to see the judgment?

construction of manhole chambers, flushing tanks and inspection

chambers".

3. An Agreement was executed between the parties. It Is

.

not disputed that clause 25 of the Agreement provides for reference

to sole arbitration of the person appointed by the Engineer-in-

Charge/Chief Engineer, HPPWD.

4. Disputes and differences arose between the parties

under the Agreement. The petitioner invoked arbitration vide notice

dated 14.07.2022 seeking appointment of an Arbitrator.

5. The respondents have not replied to the said notice and

failed to act upon the said notice.

6. There is no affidavit-in-reply filed by the respondents

opposing the present Application.

7. In Datar Switchgears Ltd. Versus Tata Finance Ltd.

and another, (2000) 8 Supreme Court Cases 151, the Supreme

Court has held in paragraph 19 that upon the filing of the Application

under Section 11(6) of the Act, the right of the opposite side to make

appointment of Arbitrator ceases/is forfeited.

8. In Perkins Eastman Architects DPC and another

versus HSCC (India) Ltd., reported in (2020) 20 SCC 760, the

Supreme Court in paragraphs 20 & 21 has held as follows:-

"20. We thus have two categories of cases. The first,

similar to the one dealt with in TRF Limited, 2017 8 SCC 377 where the Managing Director himself is named as an arbitrator with an additional power to appoint any other person as an arbitrator. In the

.

second category, the Managing Director is not to act as an arbitrator himself but is empowered or authorised to appoint any other person of his choice

or discretion as an arbitrator. If, in the first category of cases, the Managing Director was found incompetent, it was because of the interest that he

would be said to be having in the outcome or result of the dispute. The element of invalidity would thus be directly relatable to and arise from the interest that he

would be having in such outcome or decision. If that

be the test, similar invalidity would always arise and spring even in the second category of cases. If the interest that he has in the outcome of the dispute, is

taken to be the basis for the possibility of bias, it will always be present irrespective of whether the matter stands under the first or second category of cases.

We are conscious that if such deduction is drawn from the decision of this Court in TRF Limited, 2017 8

SCC 377 , all cases having clauses similar to that with which we are presently concerned, a party to the

agreement would be disentitled to make any appointment of an Arbitrator on its own and it would always be available to argue that a party or an official or an authority having interest in the dispute would be disentitled to make appointment of an Arbitrator.

21. But, in our view that has to be the logical deduction from TRF Limited, 2017 8 SCC 377 .

Paragraph 50 of the decision shows that this Court was concerned with the issue, "whether the Managing Director, after becoming ineligible by operation of law, is he still eligible to nominate an

.

Arbitrator" The ineligibility referred to therein, was as a result of operation of law, in that a person having an interest in the dispute or in the outcome or

decision thereof, must not only be ineligible to act as an arbitrator but must also not be eligible to appoint anyone else as an arbitrator and that such person

cannot and should not have any role in charting out any course to the dispute resolution by having the power to appoint an arbitrator. The next sentences in

the paragraph, further show that cases where both

the parties could nominate respective arbitrators of their choice were found to be completely a different situation. The reason is clear that whatever

advantage a party may derive by nominating an arbitrator of its choice would get counter balanced by equal power with the other party. But, in a case

where only one party has a right to appoint a sole arbitrator, its choice will always have an element of

exclusivity in determining or charting the course for dispute resolution. Naturally, the person who has an

interest in the outcome or decision of the dispute must not have the power to appoint a sole arbitrator. That has to be taken as the essence of the amendments brought in by the Arbitration and Conciliation (Amendment) Act, 2015 (Act 3 of 2016) and recognised by the decision of this Court in TRF Limited."

9. In view of Section 12(5) of the Act and the enunciation

of law by the Supreme Court in the aforesaid case of Perkins

.

Eastman (supra), the Engineer-in-Chief/Chief Engineer, H.P. P.W.D.

Department would be ineligible to appoint an Arbitrator.

10. In the circumstances, a case has been made out by the

petitioner for this Court to exercise jurisdiction under Section 11(6) of

the Act to appoint an Arbitrator. Hence, the following order:

ORDER

(i) Er. Balwant Singh Bhatia, Chief Engineer, IPH (retired)

is appointed as a sole Arbitrator to adjudicate the

disputes between the parties.

(ii) The learned Arbitrator, before entering the arbitration

reference, shall forward a statement of disclosure as

per the requirement of Section 11(8) read with

Section12(1) of the Act to the Registrar (Judicial) of this

Court (to be placed on record of this application) and a

copy thereof be forwarded to the parties.

(iii) The parties shall appear before the learned Arbitrator on

a date which may be fixed by the learned Arbitrator, not

later than four weeks from the date of receipt of a copy

of this order.

(iv) The fees payable to the Arbitral Tribunal shall be as

prescribed in the Fourth Schedule appended to the

Arbitration and Conciliation Act, 1996.

.

(v) Office to forward a copy of this order to the learned

Arbitrator on the following address:-

" Er. Balwant Singh Bhatia, Chief Engineer, IPH (Retired), R/O Dev Niwas,

Below Children Park, Sanjauli, Shimla, Himachal Pradesh-171006."

11. The Application is allowed in the above terms.

( A.A. Sayed ) Chief Justice

30th December, 2022

(priti)