U.P.State Bridge Corp v. UOI

Order dasti. MAY 20, 2008 S. RAVINDRA BHAT,J 'sn' 7 of 7

* IN THE HIGH COURT OF DELHI AT NEW DELHI Date of Decision: 20th May, 2008 + U.P.STATE BRIDGE CORP ..... Petitioner Through Mr.Sunil Malhotra, Advocate. versus UOI ..... Respondent Through Ms. Zubeda Begum, Advocate. CORAM: 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? % 20.5.2008 Mr. Justice S. Ravindra Bhat (Open Court) 1. The controversy in this petition under Section 14 of the Arbitration and Conciliation Act concerns the order of respondent appointing Shri Chander Pal instead of Shri A.K.Singhal as Arbitrator. 2. The parties had entered into a contract whereby the petitioner was to execute the works of the respondent. The contract contained an arbitration clause, in standard terms, i.e. clause 25. The relevant part of that clause reads as follows:- "Except where the decision has become final, binding and conclusive in terms of Sub Para (i) 1 of 7 above disputes or difference shall be referred for adjudication through arbitration by a sole arbitrator appointed by the Chief Engineer, CPWD, in charge of the work or if there by no Chief Engineer, the administrative head of the said CPWD. If the arbitrator so appointed is unable or unwilling to Act or resigns his appointment or vacates his office due to any reason whatsoever another sole arbitrator shalla be appointed in the matter aforesaid. Such person shall be entitled to proceed with the reference from the stage at which it was left by predecessor." 3. The petitioner raised disputes and demanded appointment of an Arbitrator. In exercise of its powers, the respondent appointed Mr.A.K.Singhal, as the sole Arbitrator by order dated 15.10.2003. The petitioner is aggrieved by the order dated 15.2.2006 whereby the previous order was recalled and Shri Chander Pal has been now appointed as Arbitrator to continue with the proceedings from the stage at which the previous Arbitrator had left it. 4. The petitioner contends and his counsel, Shri Sunil Malhotra, submits that the order substituting or replacing the Arbitrator as it were, is unsupportable in law. He adverts to Sections 14 and 15 of the Act and says that none of the pre-conditions for their application exist in the present case and that mere existence of the power under clause 25(2) itself does not imply that the respondents are free to use it at any stage. 5. Ms.Zubeda Begum, learned counsel for the respondent 2 of 7 relied upon the impugned order dated 15.2.2006 and contended that the same was issued as a consequence to this Court's direction in OMP 545/2005. It is contended that the respondents did not invoke their powers arbitrarily or with malice but purely as a bona fide measure, to give effect to directions of the Court. Learned counsel relied upon Section 15(1)(a) and contended that the Arbitrator can always be replaced by recourse to the appointment mechanism agreed to by the parties. 6. For a proper appreciation of this case, it would be necessary to extract, at this stage, Sections 14 and 15:- "14. Failure or impossibility to act.- (1)The mandate of an arbitrator shall terminate if - (a) he becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay; and (b) he withdraws from his office or the parties agree to the termination of his mandate. (2) If a controversy remains concerning any of the grounds referred to in clause (a) of sub- section(1), a party may, unless otherwise agreed by the parties, apply to the court to decide on the termination of the mandate. (3) If, under this section or sub-section(3) of section 13, an arbitrator withdraws from his office or a party agrees to the termination of the mandate of an arbitrator, it shall not imply acceptance of the validity of any ground referred to in this section or sub-section (3) of section 12. 15. Termination of mandate and substitution of ar