The Chhotanagpur Regional Handloom Weavers Co-Op Union Ltd v. Association of Corporation and Apex Societies of Handlooms(Acash) and Another

Order dasti.

S. RAVINDRA BHAT,J

SEPTEMBER 18, 2008 "b"

Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI Date of Decision: September 18, 2008 + THE CHHOTANAGPUR REGIONAL HANDLOOM..... Petitioner Through Mr.D.K.Rustagi, Advocate. versus ASSOCIATION OF CORPORATION AND APEX ..... Respondent Through Mr.Neeraj Malhotra with Mr.Shohit Chaudhary, Advocate for respondent No.1. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT 1. Whether reporters of local papers may be allowed to see the judgment? YES 2. To be referred to the Reporter or not? YES 3. Whether the judgment should be reported YES in the Digest? % 18.09.2008 Mr. Justice S. Ravindra Bhat (OPEN COURT) 1. Heard counsel for the parties. The petitioners have sought an appropriate orders under Section 14 of the Arbitration and Conciliation Act 1996 for removal of arbitrator on the ground that his mandate terminated de facto as well as de jure. 2. The brief facts of the case are that the Government of Bihar framed a scheme 1997 for distribution of garments, i.e. cotton Dhoties and Sarees. It sought to purchase vast quantities of such articles. One ACASH"s bids were found to be the lowest it entered to an agreement to supply such articles. ACASH entered into an agreement with the petitioner society on 11.3.1997 Page 2 for procurement of Sarees valued Rs.11.39 crores and paid an advance of Rs.2 crores. It is claimed that the petition er supplied certain quantities of the articles. 3. The dispute arose with respondent no.1 ACASH, now ACASH which invoked a bank guarantee. Eventually, a dispute arose which was referred to arbitration. Clause 14 of the agreement entered into the petitioner"s society and respondent No.1 reads as follows:- "Clause 14: Removal of difficulties. In case there are problems in implementing the contract, the matter will be sorted out through mutual negotiation between ACASH & Govt. of Bihar." 4. It is not dispute that Development Commissioner Handlooms is ex-officio Chairman of the ACASH. The petitioner"s claims were referred to arbitration, prior to 2000. It is contended that there have been practically no proceedings after 3.2.2000. It is also alleged that the Development Commissioner acted in a biased manner in a proceeding further, in arbitration which resulted in the lost of his mandate. On the strength of these allegations, the petitioner seeks an order to set aside the mandate of respondent No.2 Development Commissioner and for consequential appointment of another Arbitrator. 5. Several adjournments were given to the respondent to file their reply. The same is not placed on record. The respondent contended that the allegations are unfound. The circumstances whereby the Development Commissioner had to invoke the bank guarantee, was because of his official duties which cannot had to an interfere that he was biased in considering the dispute. Learned counsel contended that as far as question of loss of mandate in arbitration not proceedings with the case diligently is concerned the petitioner does not deserve relief. In this regard, the respondent contends that the petitioner is in fact approaching this Court after Page 3 more than eight years of the invocation of the bank guarantee and has, therefore, shown undue delay seeking relief. 6. Learned counsel contends that at least five incumbents have changed Office as Development Commissioner and therefore all cannot be biased nor can be said to have delayed conduct of proceedings. Learned counsel submitted that even if it were agreed that the arbitrator had lost mandate nevertheless Section 15(2) stipulates that the arbitrator would have to be same since the substitute arbitrator would be appointed in terms of the agreed rule. 7. The above factual narrative discloses that there is no dispute that arbitration proceedings have been at a standstill since about 8 years. Although the respondent is to some extent justified, in contending that the conduct of arbitral proceedings are to be judged from an overall perspective, it cannot be overlooked that the objective of the Ac