Orissa High Court
Suresh Chandra Mirchandan vs Chief General Manager on 7 July, 2022
IN THE HIGH COURT OF ORISSA AT CUTTACK
ARBA No.12 of 2008
(Through hybrid mode)
Suresh Chandra Mirchandan .... Appellant
Mr. S.K. Purohit, Advocate
-versus-
Chief General Manager, Mahanadi .... Respondents
Coalfields Ltd. and another
Mr. S. Mohanty, Advocate
CORAM: JUSTICE ARINDAM SINHA
ORDER
07.07.2022
Order No. I.A. no.24 of 2022
19. 1. This application is for recall of order dated 3rd March,
2022, dismissing the appeal. Mr. Purohit, learned advocate
appears on behalf of applicant/appellant and had moved the
application on 24th June, 2022. Order made that day is
reproduced below.
"Mr. Purohit, learned advocate appears on
behalf of applicant and submits, his client is
interested in the appeal but unfortunately had not
given instructions, causing the appeal to be
dismissed. He prays for recall of order dated 3rd
March, 2022.
2. Applicant is directed to serve copy of the
recall application along with this order on learned
advocate, who had appeared on 3rd March, 2022,
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when the appeal was dismissed. It is made clear that
the appeal itself will be taken up on adjourned date.
In event applicant is not ready with the appeal, the
recalling application is likely to be dismissed.
3. List the recall application on 30th June, 2022,
immediately after old matters."
2. Mr. Mohanty, learned advocate appears on behalf of
respondents. Parties are ready for hearing and disposal of the
appeal. In the circumstances, causes shown for lack of
instruction in pressing the appeal on 3rd March, 2022 are
accepted. The appeal is restored to file and the application is
disposed of.
3. Mr. Purohit submits, his client was contractor engaged
by Mahanadi Coalfields Ltd. (MCL) to do work. Though time
for doing the work was specified, several extensions were
granted by the employer. It is because of the employer that the
work could not be completed. 20% of the work remained
outstanding. In the circumstances, his client required resolution
of disputes by arbitration.
4. Chairman-cum-Managing Director (MCL) appointed
sole arbitrator. MCL was the employer. As such the Chairman-
cum-Managing Director (MCL) was ineligible to be arbitrator.
He could not then have appointed sole arbitrator,
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notwithstanding the arbitration agreement clause. He submits,
arbitration is based on neutrality. The employer appointed its
person as arbitrator. Nothing further need be said on the
adjudication suffering from bias.
5. He relies on judgments of the Supreme Court.
(i) Judgment dated 26th November, 2019 in
Arbitration Application no.32 of 2019 (Perkins Eastman
Architects DPC v. HSCC (India) Ltd., paragraph 14
(Indiankanoon print). Relied upon passage is extracted and
reproduced below.
"14. In TRF Limited, the Agreement was
entered into before the provisions of the Amending
Act (Act No.3 of 2016) came into force. It was
submitted by the appellant that by virtue of the
provisions of the Amending Act and insertion of the
Fifth and Seventh Schedules in the Act, the
Managing Director of the respondent would be a
person having direct interest in the dispute and as
such could not act as an arbitrator. The extension of
the submission was that a person who himself was
disqualified and disentitled could also not nominate
any other person to act Arbitration Application
No.32 of 2019 Perkins Eastman Architects DPC &
Anr. v. HSCC (India) Ltd."
(ii) Decision dated 10th February, 2017 in Arbitration
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Petition (Civil) no.50 of 2016 M/s. Voestalpine Schienen
GMBH v. Delhi Metro Rail Corporation, paragraph-16 and 17
(IndiaLawLib print).
(iii) Decision dated 3rd July, 2017 in Civil Appeal
no.5306 of 2017 (TRF Ltd. v. Energo Engineering Projects
Ltd.), paragraphs 11, 56 and 57 (IndiaLawLib print). On query
from Court he submits, both Voestalpine (supra) and TRF
(supra) were referred to in Perkins (supra).
6. On further query from Court regarding whether the
declaration of law relied upon for the proposition that an
arbitrator, himself ineligible, cannot appoint another as based on
the year 2015 amendment, if can be made applicable to the
present case wherein the award was passed long before the
amendment, he reiterates his submission that because there is
inherent bias attributed to an ineligible person, the principles of
the declaration of law do apply.
7. Mr. Mohanty submits, the award is good and there
should not be interference in appeal on it having been upheld
by the lower Court. The judgments cited by Mr. Purohit do not
apply since the award is dated prior to the year 2015
amendments.
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8. The position in law regarding bias in an adjudication
prior to the year 2015 amendment relied upon was to find it
appearing from the record. In this case Court has perused the
award. There is no apparent bias in the award. It is true that
Chairman-cum-Managing Director of MCL appointed the sole
arbitrator. The person then held office as General Manager,
Management Training Institute, MCL. The award is dated 1st
February, 2000.
9. In the award the arbitrator has tabulated respective cases
presented by the parties. It is clear that only 80% of the work
was done. The award says appellant had alleged that sites were
handed in piecemeal during June and July, 1993. Several
extensions of time were granted. The department had sent
express telegram to appellant requesting completion of balance
work within 20th March, 1996, to be treated as final notice.
10. The award also gives analysis of the evidence adduced
by the parties. The analysis says that appellant had not stated
when he submitted drawing to the department while the
department adduced documentary evidence to show that delay
was due to the late submission. Though appellant had said that
monsoon affected the work but the arbitrator found that the
whole work were to be completed in six months time but during
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the first four months appellant did only 10% of the work. On
contention of appellant that there were two separate individual
work sites, the arbitrator found mention in the Notice Inviting
Tender (NIT) of the scope of work at the sites. In rejecting the
claims of work done but not paid for, refund of security deposit
and overheads, the arbitrator also rejected the consequential
claims of interest etc. There was finding on facts regarding the
amount of work done and that it had been paid for. There was
rejection of claim for refund of security deposit on the work
remaining incomplete.
11. The arbitrator allowed counter claims put up by the
employer. Two counter claims were allowed. Firstly, forfeiture
perpetual of security deposit and secondly, imposition of due to
belated completion of work. On perusal of reasons given in the
award for allowing the claims, Court finds that as aforesaid the
arbitrator awarded forfeiture of security deposit because the
work was not completed. However, the arbitrator held that MCL
had not closed the contract. In the circumstances, the award of
penalty appears to be perverse. This is because penalty imposed
at 10% of agreement value is on an agreement right to impose
penalty due to belated completion of work but the arbitrator
himself found that the work was incomplete and MCL had not
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yet closed the contract. This counter claim award on penalty of
Rs.91,800/- is severable and is set aside.
12. Impugned judgment dated 28th July, 2007 is modified as
above.
(Arindam Sinha)
Judge
Sks
