M/S Pardeep Electricals And ... vs Union Of India And Others
2023 Latest Caselaw 310 j&K

        HIGH COURT OF JAMMU AND KASHMIR & LADAKH
                        AT JAMMU


                                               Reserved on         : 31.12.2022
                                               Pronounced on       : 21.02.2023

                                               Arb P No. 37/2022


M/s Pardeep Electricals and Building Pvt. Ltd.

                                                       ..... Petitioner(s)...

                          Through:-Mr. Pranav Kohli, Sr. Advocate with
                                  Mr. Arun Dev Singh, Advocate

            Vs.

Union of India and others
                                                      ......Respondent(s)...

                   Through:- Mr. Vishal Sharma, DSGI


CORAM:
     HON'BLE MR. JUSTICE TASHI RABSTAN, JUDGE

                                 JUDGEMENT

1. The instant petition is filed by the petitioner under Section 11(6) of the

Arbitration and Conciliation Act, 1996 (hereinafter referred to as „the

Act') seeking appointment of an Arbitrator.

2. The brief facts of the case are stated infra:

Due to various defaults/failures on the part of the respondents in

complying the laws of land as well as fulfill reciprocal contractual obligations,

performance and the progress of work allotted to the petitioner i.e. CA No:

CELZ-01/2017-18, CONSTRUCTION OF OTM ACCN AT NIMMU,

arbitration clause has been invoked by the petitioner by issuing a notice bearing

No. PEBPL/CELZ/01/2017-18/146 dated 07.05.2022 requesting the respondents

to appoint an arbitrator. The petitioner being eligible, participated in the

tendering process and submitted its bid. The petitioner-firm emerged as lowest

bidder and was allotted the contract bearing No. CELZ-01/2017-18 vide Chief

Engineer Leh Zones communication bearing No. 180040/130/E8 dated

28.08.2017 for the lumpsum amount of Rs.29,60,00,000.01 (Rupees twenty nine

crore sixty lacs and paisa one only).

As per the terms and conditions of the contract, the petitioner was to

execute the construction work after handing over of the site on 04.09.2017. The

said buildings, structures etc. were required to be constructed in accordance with

the drawings provided to the petitioner by the Chief Engineer. The initial

completion period of the work was 42 months commencing from 04.09.2017 to

03.03.2021 and was further extended up to 30.11.2022. On account of various

acts of commission and omission attributable to the respondents, the progress of

the work got substantially delayed, and from time to time extensions were

granted. During the currency of Contract, the Executive Magistrate, 1 st Class,

Nayabat, Leh issued notice in connection with the site and directed the

contractor not to process the construction work onward. The site land is

mentioned in the notice of the Executive Magistrate, 1st Class, Nayabat, Leh as

disputed land. Thereafter, the petitioner approached the Respondent authorities

time and again for getting the land freed from all encumbrances and hindrances

which was the prerequisite condition before tender was floated and contract was

allotted to the applicant/petitioner for commencement of the work. The

Respondent authorities, instead of taking up the issue with the concerned

authorities, started deviating from contractual obligations, forcing the petitioner

to communicate a letter dated 03.01.2022, requesting therein for referring the

matter to Dispute Resolution Board (DRB) as contemplated in condition 71 of

IAFW -2249, which request of the petitioner was denied and instead, the

respondents impressed upon for carrying out joint survey. Thereafter, the

petitioner vide letter No. PEBPL/CELZ/2017-18/137 dated 17.02.2022 again

informed the respondents that they have failed to „Firm up" the provisional

quantities listed under the Contract Agreement within its original period of

completion i.e. 03.03.2021, which period has since expired. The petitioner also

pointed out that the respondents failed to record the quantum of work done on

ground. It is only at the payment stage, the unwarranted observations are being

raised by the respondents. The petitioner further raised the issue of curtailed

payment by the respondents for which the petitioner claimed compensation in

terms of Section 73 of the Indian Contract Act. The petitioner countered the

contents of the communication dated 08th February, 2022 and reiterated the issue

to be referred to DRB and has stated that the petitioner has rightly invoked the

provisions of Condition 71 of IAFW-2249, CGC. The petitioner vide his

communication dated 15.04.2022 apprised the respondents that the work in

question is under deemed suspension w.e.f. 13.11.2021 on account of land

dispute with Local Civil Authorities and the learned Executive Magistrate 1st

Class, Nayabat, Leh had directed in terms of order dated 13.11.2021 to maintain

status quo towards further progress of the work under the contract agreement in

question. Denying the assertions of the petitioner, the respondents vide its

communication dated 30.04.2022 took a contrary stand. It is admitted in

communication dated 30.04.2022 of the respondents that the hindrance caused

by the local villagers is only on the road portion and the petitioner was asked to

carry out the work where there is no dispute. Thereafter, the respondents on

realizing that the construction work cannot be completed due to non availability

of site due to land dispute, vide letter dated 24.06.2022, suspended the execution

of balance work under the contract, but, not paid the amount to the petitioner for

the executed work on site. The petitioner‟s plant and machinery is lying at the

site till date. The Respondents were under the contractual obligation to provide

the land free from all encumbrances etc., and the petitioner was only the

Executing Agency and non availability of land and other issues has led to delay

in execution of the work. Apart from the executed work, the petitioner suffered

huge losses as the work could not be progressed due to non availability of

land/site.

3. On notice, respondents have filed their objections resisting the petition.

4. I have heard learned counsel appearing for the parties, considered their

submissions and perused the record.

5. Mr. Pranav Kohli, learned senior counsel appearing for the petitioner has

submitted that in a similar situation as has arisen in the present petition in

arbitration petition bearing Arb P No. 34/2020 titled M/s Pardeep Electrical and

Building Pvt Ltd Vs Union of India and others, this Court vide its order

23.03.2021 has already dealt with this issue and appointed Shri Justice M.M

Kumar, a former Chief Justice of this High Court as an Arbitrator for

adjudication of the disputes between the parties.

6. Mr. Pranav Kohli, learned senior counsel has produced a copy of order

dated 25.03.2022 passed by the Hon‟ble Supreme Court, same is taken on

record. From the perusal of order dated 25.03.2022, it is revealed that the

judgment dated 23.03.2021 passed by this Court in Arb P No.34/2020 was

challenged in SLP(C) No.2527/2022 by the respondents-Union of India and the

said appeal has been dismissed by the Hon‟ble Supreme Court vide order dated

25.03.2022.

7. It is argued by Mr. Vishal Sharma, learned DSGI that in view of

Condition 70 of IAFW 2249 and condition Nos. 55, 56 and 57 unless both

parties agree in writing such reference shall not take place until after the

completion or alleged completion of the work or termination or determination of

the contract under Condition Nos. 55, 56 and 57.

8. The second argument of the respondents is the mandatory condition to

approach the Dispute Resolution Board in terms of Special Conditions of

Contract, i.e, Condition No. 39, Mr. Vishal Sharma, learned DSGI has produced

a copy of communication No.180040/573/E8 dated 19.11.2022 issued by

respondent No.3 which suggests that respondent No.2 has now notified the

Dispute Resolution Board (DRB) and the name of Chairman and two other

members of the DRB are also mentioned.

9. In the present case, in order to assess whether the petitioner is entitled to

seek appointment of an Arbitrator under the facts and circumstances of the case

especially in view of the language used in clause 70 of the contract/agreement, it

becomes imperative to go through the aforesaid arbitration clause which is

reproduced below:-

"70. Arbitration--All disputes, between the parties to the Contract (other than those for which the decision of the C. 3 Arbitration Petition No. 34 of 2020 W. E. or any other person is by the Contract expressed to be final and binding) shall , after written notice by either party to the Contract to the other of them, be referred to the sole arbitration of a [Serving Officer having degree in Engineering or equivalent or having passed final/direct final Examination of sub- Division II of Institution of Surveyor (India) recognized by the Govt. of India] to be appointed by the authority mentioned in the tender documents.

Unless both parties agree in writing such reference shall not take place until after the completion or alleged completion of the Works or termination or determination of the Contract under Condition Nos. 55, 56 and 57 hereof.

Provided that in the event of abandonment of the Works or cancellation of the Contract under Condition Nos. 52, 53 or 54 hereof, such reference shall not take place until alternative arrangements have been finalized by the Government to get the Works completed by or through any other Contractor or Contractors or Agency or Agencies.

Provided always that commencement or continuance of any arbitration proceedings hereunder or otherwise shall not in any manner militate against the Government‟s right of recovery from the Contractor as provided in Condition 67 hereof.

If the Arbitrator so appointed resigns his appointment or vacates his office or is unable or unwilling to act due to any reason whatsoever, the authority appointing him may appoint a new Arbitrator to act in his place.

The Arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties,

asking them to submit to him their statement of the case and pleadings in defence.

The Arbitrator may proceed with the arbitration, exprate, if either party, inspite of a notice from the Arbitrator fails to take part in the proceedings.

The Arbitrator may, from time to time with the consent of the parties, enlarge, the time for making and publishing the award.

The Arbitrator shall give his award within a period of six months from the date of his entering on the reference or within the extended time as the case may be on all matters refererd to him and shall indicate his findings, along with the sums awarded, separately on each individual, item of dispute.

The venue of Arbitration shall be such place or places as may be fixed by the Arbitrator in his sole discretion.

The Award of the Arbitrator shall be final and binding on both parties to the Contract.

10. A plain reading of the aforesaid clause reveals that all disputes between

the parties to the contract after written notice by either of the parties are

referable to arbitration. It further provides that the reference shall not take place

until the completion or the alleged completion of the works or termination of the

contract under condition Nos. 55, 56 and 57 of the contract unless both the

parties agree in writing for such a reference. A further condition has been

imposed that in the event of abandonment of work or cancellation of contract

under conditions 52, 53 or 54 of the contract, the reference shall not take place

until alternative arrangements have been finalized by the Government to get the

work completed by or through any other contractor or agency.

11. The first two proviso of the said clause places two riders in seeking

appointment of Arbitrator. First until completion of the works and second until

alternate arrangements are made to get the works completed.

12. In M/s Mohindra Bros versus Union of India & others, 2012 SCC Vol

IV JKJ 602, it has been held that even if there is a prohibition of seeking

reference under the arbitration clause till the completion of the work, such

condition would not come into play after the period of contract has expired.

13. In light of dismissal of appeal filed by the respondents-Union of India,

before the Hon‟ble Supreme Court, no room was left for the respondents to take

such plea that the arbitration cannot take place before the completion of the

actual work or some alternate arrangements is being made by the department for

the completion of the work. Moreover, in the present case the respondents

themselves have suspended the work citing no reasons for doing the same that

itself creates a dispute between the contracting parties for the adjudication of the

same through an independent Arbitrator.

14. In the present case, the last date for completion of the contract was

30.11.2022 beyond which no extension was granted and the extension that has

been granted was while the work was under suspension due to the issuance of

notice by the Executive Magistrate dated 13.11.2021. Moreover, the petitioner

repeatedly issued notices for deemed suspension of the work, but, the

respondents did not pay any attention to the same and themselves suspended the

work at a later stage on 24.06.2022 for a period of three months. Thereafter, the

suspension has been further extended vide letter dated 03.10.2022 for a further

period of two months by the respondents vide their communication bearing

No.9190/CELZ-01/2017-18/399/E8 dated 03.10.2022.

15. The Dispute Resolution Board (DRB) was to be notified within the

period of one month from the acceptance of the contract by the respondents,

which the respondents never notified and also they were under the contractual

obligation to abide the Special Conditions of the Contract. On the contrary vide

letter dated 03.01.2022, the petitioner has rightly approached the respondents for

referring the matter to Dispute Resolution Board, but, the same was denied by

the respondents on 08.02.2022. The petitioner could not avail that remedy

because of the inaction on the part of the respondents.

16. The present petition has been filed in the month of July 2022 and the

respondents in their objections have taken the plea that they have written to the

higher authorities for notifying the Dispute Resolution Board (DRB) vide their

letter dated 12.08.2022 which is admittedly now constituted. This exercise has

been undertaken by the respondents only after filing of present petition by the

petitioner. It is pertinent to mention here that the petitioner had already

approached the respondents for referring the matter to the Dispute Resolution

Board (DRB) and therefore, has exhausted the statutory remedy well before

approaching this Court. Thus, the petitioner cannot be relegated back to

approach the Dispute Resolution Board (DRB) at this stage.

17. The record clearly indicates that the work could not be progressed due to

the inaction on the part of the respondents to provide land free from all

encumbrances etc., and the said inaction on the part of the respondents itself

creates a dispute interalia the parties to the agreement and the same is liable to

be referred to the arbitration.

18. In the given circumstances and in view of the fact that the respondents

have failed to appoint an Arbitrator in terms of the work allotment order, Shri

Justice Virender Singh, (a former Chief Justice of High Court of Jharkhand,

Ranchi) R/O H.No. 233, Sector No.11-A, Chandigarh, is appointed as the sole

Arbitrator who shall proceed in the matter in accordance with the provisions of

the Act to make an award within the time provided in the Act itself, after

charging the prescribed fee along with incidental expenses to be shared by the

parties in equal proposition.

19. The Arbitration petition stands disposed of accordingly.

20. Registry to communicate a copy of this order to Shri Justice Virender

Singh, (a former Chief Justice of High Court of Jharkhand, Ranchi) R/O H.No.

233, Sector No.11-A, Chandigarh.

(Tashi Rabstan) Judge Jammu 21.02.2023 (Madan-PS)

Whether the order is speaking : Yes.

Whether the order is reportable : Yes.