M/S R.K. Gupta And Co vs University Of Jammu And Others
2023 Latest Caselaw 357 j&K

        HIGH COURT OF JAMMU & KASHMIR AND LADAKH
                        AT JAMMU
                                                      Arb P No.50/2019

                                                      Reserved on : 04.02.2023
                                                      Pronounced on :23.02.2023


M/s R.K. Gupta and Co.                                    ....Petitioner(s)/Appellant(s)

                   Through :- Mr. R.K. Jain, Sr. Advocate with
                              Mr. Gowhar Amin, Advocate

         Versus

University of Jammu and others                                      ....Respondent(s)


                   Through :-    Mr. Ajay Abrol, Advocate

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

                                     JUDGMENT

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

J&K Arbitration and Conciliation Act, 1997 (hereinafter referred to as "Act")

seeking a direction for reference of dispute arising out of Agreement No. 4

having Allotment No. UWD/13-14/202-211 dated 1st May, 2013, inter se the

parties to an independent Arbitrator, on the strength of averments made and

grounds taken in the petition.

2. The brief facts of the case are as under:

The respondents-University of Jammu allotted a contract by way of

Agreement No. 4 having Allotment No.UWD/13-14/202-211 dated 01.05.2013

to the petitioner firm, for construction of girls hostel at Poonch Campus of

Jammu University, Poonch (Civil and Sanitary Work) for an amount of

Rs.5,62,28,210.00/-. As per the terms and conditions of the Contract Agreement

the date of commencement of work was seventh day from the date of issue of

allotment or actual date of start of work and the period of contract agreement and

its completion was up to fifteen months. After the issuance of the contract, the

petitioner firm mobilized its men and machinery and commenced work at site,

however, the respondents directed the petitioner firm to stop the work with

immediate effect and the work was stopped. Thereafter, the petitioner firm time

and again made requests to the respondents for permission to restart the work.

The petitioner firm apprised the respondents that due to stoppage of work the

petitioner company has faced huge financial loss on account of plant and

machinery as well as the manpower remained idle and material dumped at the

site, however, the respondents dilly dallied the matter on one pretext or the other,

causing severe financial loss to the petitioner, which resulted into dispute inter se

the petitioner and the respondents. Thereafter, the petitioner vide notice dated

15.07.2019 called upon the respondent No. 4 to appoint an Arbitrator in terms of

Clause (26) of the General Conditions of the Contract, for reference of the

disputes to the Arbitrator and also submitted the list of claims, however, the

respondent No. 4 failed to take steps for appointment of an Arbitrator within

thirty days, which has given cause of action to the petitioner to approach this

Court.

3. The respondents have filed objections contending therein that as per

the terms and conditions of the agreement, the petitioner was supposed to

complete the allotted work within 15 months from the date of allotment of work,

however, the petitioner could not conclude the contract and left the same

midway and thereafter issued a notice for reference of dispute to the named

Arbitrator. It is further contended that the notice was received on 31.07.2019 and

the named Arbitrator entered upon the reference on 30.08.2019 and the petitioner

was informed accordingly. The Arbitrator fixed the date for appearance of the

parties on 01.10.2019, on which date the Arbitrator conducted the preliminary

proceedings wherein the officials of the University were present, however, none

represented the petitioner and as such, proceedings were adjourned. It is further

contended that the petition is misconceived and misdirected as the same has been

filed after the Arbitrator entered upon the reference and conducted proceedings.

4. Heard learned counsel appearing for the parties and considered their

submissions.

5. The precise and only argument put forth by Mr. Ajay Abrol, learned

counsel for the respondents is that the present petition has been filed by the

petitioner after the Arbitrator entered upon the reference and conducted

proceedings on 01.10.2019 and the petitioner instead of appearing before the

learned Arbitrator on 01.10.2019 has filed this petition, therefore, the present

petition under Section 11(6) of the J&K Arbitration and Conciliation Act, 1997

is not maintainable.

6. Learned counsel for the petitioner has vehemently argued that in view

of the amendment of Section 12 of the Act, the proceedings conducted by the

Arbitrator on 01.10.2019, who has entered upon the reference, is required to be

set aside. In support of his contention he has relied upon the judgments passed

by the Supreme Court reported as AIR 2017 (Supreme Court) 939, AIR 2017

(Supreme Court) 3889 and 2021 AIR (Supreme Court) 653. Learned counsel

for the respondents in support of his contention has also relied upon the

judgment passed by the Supreme Court reported as 2013 AIR (SCW) 2781.

7. As per Clause 26 of the Contract Agreement if any dispute/doubt or

difference / question of any kind, except these on which the decision of any

authority hereto forestrated to be final and binding whatsoever other arised

between the Engineer-in-Charge or the officer of the University other than the

Vice Chancellor who is authorised competent to accept and allot the work and

the contractor in connection with or arising out of the contract, the same shall be

referred to the Vice Chancellor who shall act as arbitrator. It is averred that the

respondents have failed to exercise Clause 26 of the Agreement, despite the

petitioner approached the respondents for referring the disputes to an Arbitrator

to resolve and settle the same in accordance with law, therefore, the petitioner

was left with no other option but to file the present petition.

8. The parties admitted that the dispute is there. The only objection raised

by the respondents is that whether this Court can adjudicate the present petition

under Section 11(6) of the J&K Arbitration and Conciliation Act, 1997, as the

same has been filed after the Arbitrator entered upon the reference and

conducted proceedings. The Supreme Court in the case titled "Haryana Space

Application Centre (HARSAC) & Anr. Vs. M/s Pan India Consultants Pvt.

Ltd." reported as 2021 AIR (Supreme Court) 653 has observed in para 17, as

under:-

"17. We are of the view that the appointment of the Principal Secretary, Government of Haryana as the nominee arbitrator of HARSAC which is a Nodal Agency of the Government of Haryana, would be invalid under Section 12(5) of the Arbitration and Conciliation Act, 1996 read with the Seventh Schedule. Section 12(5) of the Arbitration Act, 1996 (as amended by the 2015 Amendment Act) provides that notwithstanding any prior agreement to the contrary, any person whose relationship with the parties, or counsel, falls within any of the categories specified in the Seventh Schedule, shall be ineligible to be appointed as an arbitrator.

Item 5 of the Seventh Schedule of the Act reads as under : "Arbitrator's relationship with the parties or counsel

5. The arbitrator is a manager, director or part of the management, or has a similar controlling influence, in an affiliate of one of the parties if the affiliate is directly involved in the matters in dispute in the arbitration."

(emphasis supplied)

Section 12(5) read with the Seventh Schedule is a mandatory and nonderogable provision of the Act. In the facts of the present case, the Principal Secretary to the Government of Haryana would be ineligible to be appointed as an arbitrator, since he would have a controlling influence on the Appellant Company being a nodal agency of the State."

The Supreme Court in Civil Appeal No. 7697 of 2021 titled as

"Ellora Paper Mills Limited vs. The State of Madhya Pradesh" decided on

04.01.2022, has observed in para 3.1 as under:-

"3.1 It is submitted that in the aforesaid decision, this Court negatived the submission that once the contractor participated in the arbitration proceedings before the Arbitral Tribunal by filing a statement of claim, thereafter it would not be open for him to approach the Court invoking sub-section (5) to Section 12 and pray for appointment of a fresh Arbitral Tribunal. It is submitted that unless and until there is an express agreement in writing to continue with the arbitration proceedings by the earlier Arbitral Tribunal, such an application to terminate the mandate of the earlier Arbitral Tribunal and to appoint a fresh arbitrator would be maintainable."

9. In the present case, admittedly, the petitioner/applicant approached the

respondent No. 4 by issuing notice dated 15.07.2019 for appointment of

arbitrator, in terms of Clause (26) of the General Conditions of the Contract, for

reference of disputes and also submitted the list of claims, however, the

respondents have failed to do the same within thirty days. Though, subsequently

the respondents had appointed arbitrator on 30.08.2019, but the petitioner did not

participated in the proceedings of the arbitrator on the date fixed, i.e.,

01.10.2019, because the petitioner had already approached this Court.

10. Also, the Vice Chancellor of the University, being head of

management of the institution who controls the administration as well as day to

day affairs of the University and directly involved in the disputes, cannot be

appointed as a sole arbitrator.

11. In view of the facts and circumstances of the case and on perusal of

the above referred judgments passed by the Supreme Court, this petition is

allowed. The earlier Arbitrator as well as the proceedings conducted by him on

01.10.2019 is terminated. Ms. Mandeep Reen, Advocate is appointed as 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.

12. The petition stands disposed of, accordingly.

13. Registry to communicate a copy of this order to Ms. Mandeep Reen,

learned Arbitrator.

                                                                      )         (Tashi Rabstan)
                                                                                    Judge

           Jammu:
           23.02.2023
           Pawan Angotra


                                             Whether the order is speaking?                Yes/No
                                             Whether the order is reportable?              Yes/No




PAWAN ANGOTRA
2023.02.23 15:09
I attest to the accuracy and
integrity of this document