AI Structured Summary
Not yet generated for this judgment
Judgment
Heard Mr. Om Kukreja, learned counsel for the applicant. Also heard Mr. Tanuj Patwardhan, learned counsel, appearing for respondent No. 1 and Ms. Astha Shukla, learned Government Advocate, appearing for respondent No. 2.
In this arbitration request, notice was issued on 10.12.2021.
Respondent No. 1 has filed reply. No reply is filed by the respondent No.2.
The applicant had participated in a tender for rate contract for supply of Diesel Generator Sets (DGS) floated by respondent No. 1. Pursuant thereto, the applicant was awarded the work of supply of DGS by an order dated 03.12.2012. Thereafter, by an order dated 10.05.2013, respondent No. 2 appointed the applicant for supply of the DGS.
On 15.05.2013, the respondent No. 2 issued a purchase order in favour of the applicant for supply and installation of 124 sets of 7.5 K.V.A D.G. Sets at different Family Health Care Units in the State of Chhattisgarh.
In connection of the aforesaid purchase order, dispute arose in between the parties.
The tender had an arbitration clause at Clause 24, which reads as follows:
"24. Arbitration
(i) In the event of any question, dispute or difference arising under these conditions or any special conditions of contract, or in connection with this contract (except as to any matters the decision of which is specially provided for by these or the special conditions) the same shall be referred to the sole arbitration of Managing Director, CSIDC Ltd. or his nominee. There will be no objection that the arbitrator is a Government Servant/Employee of Undertaking that he had to deal with the matters to which the contract related or that in the course of his duties as a Government servant / Employee of Undertaking he had express views on all or any of the matters in dispute or difference. The award of the arbitrator shall be final and binding on the parties to this contract.
(ii) In the event of the Arbitrator dying, neglecting or refusing to act or resigning or being unable to act for any reason, or his award being set aside by the court for any reason, shall be lawful for the Managing Director, CSIDC Ltd. to appoint another arbitrator in place of the outgoing arbitrator in the manner aforesaid.
(iii) It is further a term of this contract that no person other than the person appointed by the Managing Director, CSIDC Ltd. as aforesaid should as as arbitrator and that, if for any reason that is not possible, the matter is not to be referred to arbitration at all.
(iv) the arbitrator may from time to time with the consent of all the parties to the contract enlarge the time for making the award.
(v) Upon every and any such reference, the assessment of the costs incidental to the reference and award respectively shall be in the discretion of the arbitrator.
(vi) Subject as aforesaid, the Arbitration & Reconciliation Act, 1996 and the rules there under and any statutory modification thereof for the time being in force shall be deemed to apply to the Arbitration proceedings under this clause.
(vii) If the value of the claim in a reference exceeds Rs. 1 lakh, the arbitrator shall give reasoned award.
(viii) The venue of arbitration shall be the place from which formal Acceptance of Tender is issued or such other place as the CSIDC Ltd. at his discretion may determine.
(ix) In this clause, the expression "the Managing Director, CSIDC Ltd." means the Managing Director, CSIDC Ltd. for the time being and includes if there be no Managing Director, CSIDC Ltd. or if Managing Director, CSIDC Ltd. is on leave or is absent from duty or is not available for any reason whatsoever, the Chief General Manager (CSIDC Ltd.); in case both the Managing Director and the Chief General Manager (CSIDC Ltd.) are on leave or are absent from duty or are not available for any reason what so ever, the officer who is looking after the current duties of Managing Director, CSIDC Ltd.; in case both the Managing Director and the Chief General Manager are on leave or are absent from duty or are not available for any reason whatsoever, the officer who is looking after the current duties of Managing Director, CSIDC Ltd. whether in addition to other functions or otherwise."
Aggrieved by alleged wrongful deduction made by the respondent No.2, the applicant had sent a legal notice dated 08.11.2019 calling upon the respondent No. 2 to make payment of Rs. 41,77,538/-, which amount was deducted on account of delay in supply of DGS along with interest @ 18% per annum.
As no action was taken on the said legal notice, the applicant had approached this Court by filing Writ Petition (C) No. 2895 of 2020 and this Court by an order dated 02.12.2020 had directed the applicant to make a representation before respondent No. 2 within a period of three weeks, with a further direction to respondent No. 2 to decide the representation within a further period of three weeks.
In response to the representation dated 10.12.2020 submitted by the applicant, the respondent No. 2 rejected the representation by an order dated 02.08.2021 upholding the deduction of the amount.
Being aggrieved by the same, the applicant requested the respondent No. 1 by letter dated 01.10.2021 invoking arbitration clause.
Paragraph 17 of the letter dated 01.10.2021, reads as follows:
"17. Thus, in view of the above said facts and without prejudice to my client's rights, averments and contentions, my client hereby invokes the Arbitration clause being Clause No. 24, and request your good office to propose and nominate the name of arbitrator within 30 days from the date of receipt of the present notice, so that the disputes as arisen between the parties can be settled, failing which my client will be constrained to initiate appropriate legal proceedings at your risk, cost and consequences thereof."
As no action was taken by the Managing Director of the respondent No. 1, the applicant had filed this application.
In the reply filed by the respondent No. 1, it is stated that as the applicant has not filed the original or certified copy of the agreement as required under Section 8 (2) of the Arbitration and Conciliation Act, 1996 (for short, 'Act of 1996'), the petition is not maintainable. It is also pleaded that no person other than the person appointed by the Managing Director of respondent No. 1 should act as an Arbitrator and that if for any reason that is not possible, the matter is not to be referred to arbitration at all. Since the Arbitrator was not appointed by the Managing Director, it is sought to be contented that this application is misconceived.
It is not denied that there was an arbitration agreement in between the parties and rather it is admitted by the respondent No. 1 that there is an arbitration clause in the form of Clause 24.
Section 8(2) of the Act of 1996 is not relevant for the purpose of this case. The requirement of filing the original arbitration agreement or a duly certified copy thereof, no doubt is a requirement under Section 8(2) of the Act of 1996. However, Section 8(2) of the Act of 1996 deals with the power to refer the parties for arbitration when there is an arbitration agreement and present is an application under Section 11(6) of the Act of 1996. When the existence of the agreement or arbitration clause is not denied, I find no merit in the contention that in the absence of the original agreement, the petition is to be dismissed.
The applicant had, by the notice dated 01.10.2021, requested for appointment of the Arbitrator. The Managing Director, who was entrusted with the responsibility of appointing Arbitrator, maintained a stoic silence. It was not held by the Managing Director, for whatever reasons, that appointment of Arbitrator is not possible. In absence of any such decision of the Managing Director, it has to be conceded that the Managing Director has forfeited his right to appoint Arbitrator.
Failure to appoint is not to be equated with ‘not possible to appoint’, and therefore, reliance placed by the respondent No.1 in Clause 24(iii) of the agreement is without any merit, and therefore, I am of the opinion that this application under Section 11(6) of the Act of 1996 is maintainable.
Taking that view, this application is allowed.
Hon'ble Mr. Justice V.K. Shrivastava (Retd.) is appointed as the Arbitrator. The parties may raise their respective disputes before the Arbitrator.
The Registry is directed to communicate this order to Hon'ble Mr. Justice V.K. Shrivastava (Retd.) in his proper address.