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Judgment
By way of this application filed under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (for short "the Act of 1996) (as amended upto date), the petitioner-company has made the request for appointment of sole arbitrator to adjudicate and decide all the disputes with the respondent-Corporation, arising out of, and relating to, the contract work for "construction of 3 numbers S.M. Barrack (G+II) in 01 Block and 24 numbers Type-II (G+II) quarters in 4 Blocks for Assam Rifles at Maram, Manipur (Package No.115)" entered between the petitioner and respondent No.1 on 14.03.2009.
The petitioner-company claims that it is a reputed construction firm engaged in construction work in the entire North East Region for several years and had earned a good name and reputation as one of the premier construction firms in the region. Petitioner-company had completed several projects for the Directorate General Assam Rifles and National Projects Construction Corporation Ltd. (NPCC) for construction of office buildings, official quarters etc. in various parts of North Eastern Region.
According to the petitioner-company, the respondent No.1-NPCC is a Government of India Enterprise having its corporate office at Haryana and Zonal office at Madanriting, Shillong working as an agency through whom the tender works for construction of various Government Department including the Directorate General of Assam Rifles are allotted to different contractors. The respondent No.2 the Directorate General of Assam Rifles is a Government Department under the Ministry of Home Affairs, New Delhi having its Head Quarter at Laitkor Peak, Shillong. The office of the Directorate General of Assam Rifles for construction of various office building, staff quarter etc. engaged respondent No.1 as the agency for allotting the various tender works.
As per the contract, the work for the project commenced on 14.03.2009 and the stipulated date of completion was 13.03.2011. However, for reasons not attributable to the petitioner, the work could not be completed within the stipulated time as such petitioner vide letter dated 07.02.2011 requested the respondent No.1 to extend the time till 31.12.2011 and a justified period of time was extended up to 31.10.2013 without levying any liquidated damages or any penalty under clause 61.0 of the contract agreement. Petitioner could complete the work on 30.12.2013 and duly informed the respondent No.1 vide letter dated 30.12.2013. The petitioner submitted the running bills from time to time with escalation amount including the final bill. The respondents in compliance to the terms and conditions of the contract agreement duly paid necessary price escalation to the petitioner for the work done within the original stipulated date of completion i.e. 13.03.2011. However, for the justified extended period till the date of actual completion of work, no escalation was paid to the petitioner by the department. The total escalation amount during the justified period of extension comes to a sum of Rs. 26,28,411/- (Rupees twenty six lakhs twenty eight thousand four hundred eleven). The petitioner requested the respondents to make payment of the escalation. Thereafter, the petitioner submitted the detailed break up to 18.11.2015. The respondent-NPCC on principle accepted the escalation claims of the petitioner and as such accordingly forwarded the escalation claim to the Chief Engineer, HQ, DGAR, Shillong vide letter No.700001/NEZ(C)/2954 dated 30.03.2016 requesting to make payment at the earliest but the respondent No.2 vide letter dated 07.04.2016 did not accept the claim for escalation as informed by respondent No.1 to the petitioner vide letter dated 26.08.2016.
Petitioner vide notice dated 28.10.2016 requested the respondents to pay the escalation bills within a period of 15 (fifteen) days from the date of receipt of the notice and further informed that in case of failure to release the escalation amount, necessary legal steps will be initiated. The respondent instead of paying the escalation bills most illegally deducted Liquidated Damages (LD) from the 10th RA Bill of the petitioner to the tune of Rs. 1,41,649/- (Rupees one lakh forty one thousand six hundred forty nine). Petitioner vide letter dated 10.03.2016 requested the respondents to release the liquidated damages with interest. The respondent-NPCC vide letter No.700001/NER(C)/2985 dated 28.03.2017 had informed the petitioner that the escalation bill of the petitioner was sent to Assam Rifles for consideration but the Assam Rifles authorities have now informed vide letter dated 27.02.2017 that the bills are not processed for further consideration in view of legal opinion obtained by them from CGS.
Thus, a clear dispute had arisen between the parties in connection with and relating to the contract agreement. Clause 18 of the contract agreement provides for arbitration clause. The petitioner-company vide letter dated 30.03.2019 addressed to the Chairman and Managing Director, NPCC through pleader requested for appointment of a sole arbitrator for adjudication of the disputes. But the respondent No.1 had failed to appoint the sole arbitrator within thirty days from the date of receipt of the letter requesting for appointment of arbitrator as per clause 18 of the contract agreement. Hence, the present application under Section 11 (6) of the Act of 1996 seeking for appointment of an arbitrator for adjudicating the disputes arises between the parties.
I have heard learned counsel for the parties. There is Clause 18 of the agreement which provides for resolution of dispute between the parties through arbitration. Clause 18 of the agreement, reads as under:-
"Clause 18 ARBITRATION CLAUSE: Except where otherwise provide in the contract all question and disputes relating to the meaning of the specification, designs drawing and instructions before mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, rights, matter or things whatsoever in anyway arising out of or relating to contract design, drawing, specifications, estimates, construction order or these conditions or otherwise concerning the works or the execution or failure to execute the same, where arising during the progress of the works or after the completion or abandonment thereof shall be referred to the sole arbitration of the persons appointed by the Chairman and Managing Director of National Projects Construction Corporation Ltd. Acting as such at the time of dispute. It will be no objection to any such appointment that the arbitrator so appointed is a Corporation's Officer, that he had to deal with the matters to which the contract relates and that in the course of his duties as Corporation Officer he had expressed views on all/ or any of the matters in disputes or difference. The arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reasons, the Chairman and Managing Director, shall appoint another person to act as arbitrator in accordance with reference from the date at which it was left by his predecessor. It is also a term of this contract that person other than a person appointed by the Chairman and Managing Director as aforesaid should act as Arbitrator and if for any reason, that is not possible, the matter is not to be referred to arbitration at all. The arbitrator may from time to time with the consent of the parties, enlarge the time for making and publishing the award. Subject as aforesaid the provisions of the Arbitration & Reconciliation Act, 1996 or any statutory modification or reenactment thereof and the rules made there under and for the time being in force shall apply to the Arbitration proceeding under this Clause. The Court of Shillong only and no other shall have the jurisdiction with regard to any dispute or difference or suit relating to the contract. The arbitrator shall give reasons for the award."
Undisputedly, from the material placed on record, it is clear that the petitioner made a request to the respondents to appoint an arbitrator in accordance with the said arbitration agreement but the respondents failed to appoint the sole arbitrator for adjudicating the disputes between the parties.
In view of the above, it is just and proper that an independent arbitrator is appointed to adjudicate and decide the dispute between the parties including their claims, counter claims and objections. There was consensus between learned counsel for the parties for appointment of Mr. Justice B.K. Sharma, former Judge of Gauhati High Court to be an arbitrator. Accordingly, Mr. Justice B.K. Sharma, former Judge of Gauhati High Court is appointed as arbitrator in this case to adjudicate upon and decide all the disputes between the parties including their claims, counter claims and objections relating to the contract in question.
All other aspects relating to the cost of proceedings and fees are left to be determined by the arbitrator while keeping in view the law applicable and compliance of the provisions contained in Fourth Schedule to the Arbitration and Conciliation Act, 1996 (as amended up to date).
Arbitration petition stands disposed of accordingly.