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Judgment
Anil Kumar, J.—This is a petition u/s 11(6) of the Arbitration and Conciliation Act,1996 by the petitioner for appointment of an arbitrator.
The petitioner contended that a work order bearing No. EE-VII/TC/WZ/96- 97/642 dated 8th January,1997 was issued to the petitioner by
the Executive Engineer-VII, MCD, Opposite Bindra Park, Rajouri Garden, New Delhi-110027 for the work of Widening and Surfacing of
internal Road, Ramesh Nagar, Mansarovar Garden, Sharda Puri, C-124/WZ-SH, Improvement of back lane by metalling and premixing in Block
E, near H. No. 15 and 36 in M.S. Garden.
According to the work order placed by the respondent on the petitioner the work was to commence on 18.1.1997 and was to be completed
within three months and consequently the stipulated date of completion was 17.4.1997. However, due to various problems the work could be
started a month later and was completed on 21st July, 1997
The petitioner pleaded that the tender cost of the work order was Rs. 96,184/- only and the petitioner had quoted a rate of 3% below the
estimated cost. The estimated cost was calculated to Rs. 99,100/-.
The allegation of the petitioner is that the respondent did not prepare the running account bill nor the final bill. The petitioner further asserted that
the since the respondent has not prepared the final bill, the petitioner has not been able to claim the amount due to him. Consequently the amounts
due to the petitioner has not been paid and the disputes has arisen between the petitioner and the respondent. The petitioner contended that the
cause of action for filing the petition arose on 10th June, 2005
The petitioner thus invoked the arbitration clause in the agreement. The arbitration agreement between the parties in terms of Clause 25 of the
agreement is reproduced as under:
Clause 25:- Except where otherwise provided in the contract all questions and disputes relating to the meaning of specifications, design, drawings,
instructions and with regard to the quality of workmanship or materials, as used on the work or with regard to or relating to contract designs,
drawings, specification, estimates, instructions, orders or these conditions or otherwise concerning the work or the execution or failure to execute
the same where arises during the progress of work or after the cancellation, termination, completion or abandonment thereof shall be referred to
the Sole arbitration of the Commissioner of the MCD or any other person appointed by him as Arbitrator to adjudicate upon the claim. The
decision of the arbitrator with regard to the disputes referred pertaining to the agreement shall be final and binding upon the parties.
Since the disputes had arisen between the parties, the petitioner invoked the arbitration agreement and sent a notice dated 10.6.2005 invoking
the arbitration agreement and seeking appointment of an arbitrator for adjudication of disputes between the parties.
The notice was served on the respondent however, no reply was given nor in compliance with Clause 25 of the arbitration agreement any
arbitrator was been appointed entailing filing of present petition for appointment of arbitrator.
After the petition u/s 11(6) for appointment of an arbitrator was filed and notice of the petition was served. Respondent has filed a reply
contending that the claims of the petitioner are barred by time as the work order is of 1995. The respondent has also averred that the petitioner did
not approach first the Superintending Engineer first in accordance with the Arbitration Agreement. However the arbitrator was not appointed
within thirty days of service of notice of the present petition in accordance with Arbitration Agreement contained in Clause 25 of the Agreement.
The learned Counsel for the petitioner contended that he would have become entitled for amount on preparation of final bill which has not been
prepared by the respondent nor any particulars have been given for preparation of the final bill. From the perusal of reply it transpires that no
particulars have been given by the respondent as to when he prepared the final bill entitling the petitioner to claim the amount.
The petitioner has contended that the cause of action to file the petition arose on 10th June, 2005. In the circumstances prima facie it cannot be
inferred that the petition is barred by time. Whether the claims raised by the petitioner are barred by time or not, can be decided by the Arbitrator.
The other objection of the respondent is that the petitioner did not approach the Superintending Engineer. Perusal of the Arbitration Agreement,
Clause 25, as reproduced hereinabove reflect that there is no requirement of approaching the Superintending Engineer first. The learned Counsel
for the respondent it seems, have relied on some other arbitration clause, which was not the part of the agreement between the parties.
The respondent has not appointed any arbitrator nor any cogent reason has been disclosed for not appointing an arbitrator. The respondent
failed to appoint an arbitrator despite invoking the agreement and Therefore, he has forfeited the right to appoint an arbitrator in terms of Clause 25
containing arbitration agreement which contemplates that the disputes shall be referred to the adjudication through an arbitrator appointed by the
Commissioner Municipal Corporation of Delhi and that the decision of such an arbitrator appointed by the Commissioner shall be final.
A learned Single Judge in Haryana Telecom Ltd. v. Union of India and Anr. 112 (2004) DLT 339 : 2004 (3) RAJ 147, had held that since the
respondent failed to appoint an Arbitrator within the stipulated time of 30 days of the notice, and even after filing of the petition u/s 11 of the Act, it
is for the Court to appoint an Arbitrator. Learned Counsel for the petitioner states that the position is similar in present case also, since in the
present case notice was issued to the Respondent on 10.06.2005 and was served on the respondent and despite that no Arbitrator had been
appointed.
Learned Counsel has also referred to the judgment of the Division Bench of this Court in Delkon (India) Pvt. Ltd. Vs. The General Manager,
Bharat Heavy Electricals Ltd., where it was observed in paras 4 and 5 as under:
We have given our careful consideration to the arguments advanced by learned Counsel for both the parties. In view of the law laid down in the
case of Datar Switchgears Ltd. v. Tata Finance Ltd. and Anr. 4 (2000) CLT 191 : JT 2000 (Supp. 2) SC 226 it is no more rest integra that the
vacancy can be supplied by a party pursuant to the arbitration agreement even after thirty days of the receipt of the notice. However, once a party
approaches the Court and files a petition for appointment by the designated authority of the Chief Justice of that Court u/s 11(6) of the Arbitration
and Conciliation Act, the right to supply vacancy by the opposite party is extinguished. If that right stood extinguished on filing of the petition u/s
11(6) of the Arbitration and Conciliation Act, in September 1998 the appointment of an Arbitrator on 3rd May, 1999 could not be made,
Therefore in our view, the order passed by the learned Single Judge on 7th May, 1999 suffers from patent illegality. Therefore, the submission of
the respondent that the petitioner had appeared before the Arbitrator and the application of the petitioner raising preliminary objections is pending
adjudication which inter alias challenges the jurisdiction of the Arbitrator to decide the dispute is of no consequence as from the order reproduced
above it was pursuant to the directions passed by the learned Single Judge that the parties were directed to appear before the Arbitrator. The
petitioner had no other option but to appear before the Arbitrator and after appearing before the Arbitrator the petitioner has not submitted to the
jurisdiction of the Arbitrator, rather has at first opportunity taken the objection that the Arbitrator had no jurisdiction to proceed with the matter.
The learned Counsel for the respondent is unable to show anything as to why the view taken in Union of India (UOI) Vs. RR Industries, Shri R.K.
Jain, Sole Proprietor of RR Industries, Mr. B.L. Garg, Arbiotrator and Shri A.S. Yadav, Addl. Distt. and Sessions Judge, be not followed where
it was held that once a party does not supply the vacancy or fails to supply the vacancy before filing of a petition u/s 11(6) of the Arbitration and
Conciliation Act, forfeits the right to supply the vacancy in terms of the arbitration clause. What remains is only the arbitration clause, i.e. the
dispute has to be resolved under the mechanism of alternative dispute redressal scheme but no right survives to the respondent to supply the named
Arbitrator in the arbitration clause.
Another single judge of this Court has also followed the ratio of the judgment of Union of India (UOI) Vs. RR Industries, Shri R.K. Jain, Sole
Proprietor of RR Industries, Mr. B.L. Garg, Arbiotrator and Shri A.S. Yadav, Addl. Distt. and Sessions Judge, in another matter Sudhir Gensets
Ltd. Vs. Union of India (UOI) and Another, . ''Datar Switchgear'' was again affirmed by the Apex Court in Punj Lloyd Ltd v. Petronet MHB Ltd
(2006) 2 SCC 638 and it was held that once period of notice had lapsed and the petitioner had moved under Sec 11(6) of Arbitration and
Conciliation Act, 1996, party having right to appoint arbitrator under arbitral agreement loses the right to do so. There is no reason in the facts and
circumstances to differ with the ratio laid down in these cases nor any thing to the contrary has been canvassed before me.
Considering the facts and circumstances I, Therefore, appoint Mr. D.S. Paweria, retired Additional District Judge, Chamber No. 72, Civil
Wing, Tis Hazari Courts, Delhi 110054 (Res: 23932121; 23832121 Cellular 9810433390) as an Arbitrator. The fees of the arbitrator shall be Rs.
5000/- per hearing subject to a maximum of Rs. 40,000/-. Parties are directed to appear before the learned arbitrator on 1.6.2006 at 4 PM.
A copy of this order be communicated to the learned arbitrator forthwith. Parties are also directed to communicate the order to the learned
arbitrator. Copy of the order be given dusty to the parties.