P.E.S. Engineers Pvt. Ltd. vs The Engineer-in-Charge and Another

B.S. Verma, J.—Heard Sri S.K. Jain learned Counsel for the Applicant as well as Sri Sachin Datta, learned Counsel for the opposite-party (Respondents).

Relevant facts of the case are that the Petitioner moved an application u/s 11 of the Arbitration and Conciliation Act 1996, for appointment of an arbitrator for settlement of disputes between the parties, which was registered as Civil Arbitration Application No. 14 of 2004, which was allowed vide order dated 25-5-2005 and the Arbitrator was required to submit its award within a period of six months. However, since the period of six months already (sic, expired) before conclusion of the proceedings before the Arbitrator on 25-11-2005, the Applicant moved Time Extension Application No. 1998 of 2006 on 27-2-2006 with a prayer that some more time be allowed to the Arbitrator to conclude the proceedings and give the award.

The application was opposed by the Respondent by filing objection (paper No. 3820 of 2006) on 29-3-2006 stating therein that vide order dated 25-5-2005, by an administrative order of the Court, Arbitrator was appointed. According to them, the claims referred to the Arbitrator being not maintainable and the reference to Arbitrator being not in accordance with law, the Respondents filed an application u/s 16 of the Said Act. Before deciding the objection of the Respondents, the time allowed to the Sole Arbitrator had expired. It is stated that the Apex Court in the case of S.B.P. and Company v. Patel Engineering Ltd. (2005) 8 SCC 618, the verdict given in Konkan Railway Corporation v. Rani Corporation (2002) 2 SCC 3388 was overruled and it was held that the nature of jurisdiction exercised u/s 11 of the said Act is judicial in nature and the Court is required to record its finding upon the maintainability of the Claims by the Arbitrator. In view of the case law [(2005) 8 SCC 618] supra, it has been submitted that this Court is bound to consider and adjudicate upon the maintainability of the claims by the Arbitrator.

I have heard submissions made by the learned Counsel for the rival parties and perused the material on record including the verdict of the Apex Court on the subject.

It was vehemently argued by the counsel for the Respondents that the Applicant has nowhere mentioned in the application as to whether the condition for exercise of power u/s 11 of the Arbitration and Conciliation Act, 1996 are satisfied or not. Therefore, the prayer sought for is not in accordance with law and hence the same deserves to be rejected. It was further submitted that the present application has to be considered on touch stone of the law laid down by the Hon''ble Apex Court in S.B.P. v. Patel Engineering Ltd. (2005) 8 S.C.C. 618.

On the other hand, it was submitted by the Applicant''s counsel that the argument of the learned Counsel for the Respondents is misconceived considering the fact that the application be decided in terms of the judgment of the Apex Court (supra) because the verdict of the Apex Court has prospective effect and not retrospective, as has been held in paragraph No. 47(x) of the judgment which reads that "since all were guided by the decision of this Court in Konkan Rly. Corporation Ltd. v. Rani Construction (P) Ltd. and Ors. u/s 11(6) of the Act have been made based on the position adopted in that decision, we clarify that appointments of arbitrators or Arbitral Tribunals thus far made, are to be treated as valid, all objections being left to be decided u/s 16 of the Act. As and from this date, the position as adopted in this judgment will govern even pending applications u/s 11(6) of the Act." The submission of the learned Counsel for the Applicant has force.

It was further submitted by the learned Counsel for the Applicant that the Court has ample power to extend the time fixed by the court in its motion.

It has been also submitted by the learned Counsel for the Respondents that there is no provision in the Arbitration and Conciliation Act, 1996 to fix time to give arbitral award by the arbitrator. The argument of the learned Counsel for the Respondents is that the Applicant has moved the present application under the provisions of Section 11(6) of the Act. This argument is misconceived on the face of it, because in view of the decision of Konkan Rly. Corporation Ltd. (supra), the arbitrator was given time to file award and till then, the order so made was administrative and not judicial until the verdict of the Apex Court as discussed earlier. Moreover, the effect of the SBP and Company Case (supra) is prospective and not retrospective.

It was lastly submitted by the learned Counsel for the objectors that in view of the Apex Court judgment in the case of SBP and Company (supra), now before appointment of the Arbitrator, it has to be seen by the Court whether the matter is referable or not. According to the learned Counsel, now the order passed by the Judge is an order judicial in nature and not administrative and before extending the time, this issue has to be decided by the Court. This submission is misconceived for the simple reason that at the moment, this issue has not to be decided the application being merely for extension of time. Mere mentioning the provision as u/s 11(6) of the Arbitration and Conciliation Act, the application cannot be treated to be for appointment of Arbitrator. The application has to be examined on the basis of its contents and the prayer made therein. It is not in dispute that the present application has been moved for extension of time and not for appointment of arbitrator, therefore, the contention of the learned Counsel for the objectors is not acceptable.

In the case at hand, the time to give award was fixed by the Court in the interest of justice and to protect the interest of the parties so as to conclude the arbitration proceeding within the stipulated period.

It is well settled law that the parties should not suffer for the mistake committed by the Court in case time was fixed by the court under wrong impression and in such eventuality, the Applicant should not suffer for such mistake. It may be mentioned here that if the Court has a power to fix the time in the interest of justice, the Court can also enlarge time by exercising its inherent powers.

It would not be out of place to mention that when the application for appointment of arbitrator was allowed, the decision of the Apex Court in the case of Konkan Railway Corporation Ltd. and Another Vs. Rani Construction Pvt. Ltd., was in force and the power being exercised by the Court was administrative in nature and from 26-10-2005 in view of the judgment in the case of S.B.P. and Company v. Patel Engineering Ltd. (supra), the power exercised by the Chief Justice of the High Court or the Judge designated is judicial in nature as indicated earlier also.

In the result, the application succeeds. The objections are disposed of accordingly.

The arbitrator is allowed six months'' more time to conclude the arbitral proceedings and to give his award from the date of production of certified copy of this order.