Happy Electricals v. Central Public Works Department (Cpwd) D+

ORDER %

11.03.2010 Present petitions have been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "Act, 1996") for appointment of an Arbitrator. Mr. Atul Nanda, learned counsel for respondent states that respondent has, in the meantime, appointed Shri S.K. Singhal, Arbitrator, Ministry of Urban Development, New Delhi, as the sole Arbitrator to adjudicate upon all the disputes between the parties. However, Mr. S.S. Sastry, learned counsel for petitioner states that respondent has lost the right to appoint an Arbitrator in view of judgment of the Supreme Court in the case of Bharat Sanchar Nigam Ltd. and Am. vs. Dhanurdhar Champatiray reported in 2010(1) Arb. LR 280 (SC). He states that appointment of an Arbitrator is invalid because respondent has appointed the Arbitrator after the present petition had been filed. I may mention that the arbitration clause in the present case specifically stipulates that no person other than a person appointed by C-Chief Engineer would act as an Arbitrator. The said clause reads as under: "CLAUSE 25 XXX XXX XXX 11) XXX XXX XXX It is also a term of this contract that no person other than a person appointed by such Chief Engineer CPWD or the administrative head of the CPWD, as aforesaid should act as arbitrator and if for any reason that is not possible, the matter shall not be referred to arbitration at all " I am also of the opinion that the judgment of Bharat Sanchar Nigam Ltd. (Supra) does not advance the case of petitioner inasmuch as in the said judgment, Supreme Court set aside appointment of an independent Arbitrator by the High Court following its earlier three Judges Bench judgment in the case of Northern Railway Administration, Ministry of Railway vs. Patel Engineering Company Ltd. reported in 2008 (3) Art. LR 349 (SC). In fact, the relevant observations of the Supreme Court in the case of Bharat Sanchar Nigam Ltd. and Anr. (Supra) are reproduced hereinbelow: "2. These apveals by special leave have been filed against the orders dated 5^^ ofJanuary, 2005 in ARBP Nos. 11. 12. 17. 18 and 28 of2005 passed by the Hish Court of Orissa whereby the Hish Court had appointed Sh. Bibhudhendra Mishra, ci senior advocate of the Orissa Hi2h Court, as the sole arbitrator on the application of the respondent filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 4, The said contract contained an arbitration clause in terms whereof the Chief Engineer, Telecommunication/Postal Devartment in-charse of the work at the time of dispute, or if there be no Chief Engineer, the Administrative Head of the said Telecommunication/Postal Department was to be appointed as a sole arbitrator. The said provision envisaged that in terms thereof no person other than the one appointed bv such Chief Engineer or Administrative Head of the Telecommunication/Postal Department as aforesaid should act as arbitrator to decide the disputes referred to him.

¶5The respondent, by letters, requested the Chief Engineer (Civil) for appointment of an arbitrator to adjudicate the disputes between the parties in terms of ^ Clause 25 of the respective agreements. Accordins to the respondent letters were received by the Chief Engineer of the appellant no. 1 on different dates. The appellants having failed to respond to the letters of respondent requiring them to appoint an arbitrator and to appoint an arbitrator in response to such letters within the stipulated period in accordance with Clause 25 of the respective agreements, the respondent was constrained to file petitions under Section 11(6) of the Act for appointment of an arbitrator. However, according to the case made out by the appellants, on 9^^ of March, 2005, Chief Engineer (Civil). BSNL had already avvointed Sri Gurbawc Sin^h. Principal Chief Engineer (Arbitration), BSNL vide its office letter No. 69-41 (05)/CE(c)/BBSR/205. By the imyugned order, the Hish Court allowed apylication under Section 11(6) of the Act, and avvointed one Sri Bibhudhendra Mishra in place of departmental nominee Sir Gurbanx Sinsh who was appointed by Chief Engineer (Civil), BSNL of appellant no. 1. XXX XXX XXX XXX

¶9Similarly, in the case of Ace Pipeline Contracts Private Limited vs. Bharat Petroleum Corporation Limited, (2007) 5 SCC 304 = 2007 SCACTC 203

(SC)=2007(2) Arb. LR 49 (SC), this court went to observe that (para 6, p. 55 of Arb.LR): "But in sub-section (6), where the procedure has already been agreed upon by the parties, as in the present case, and in that event, if a party fails to act as required under that procedure or the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure or a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may, in that event, request the Chief Justice or a person or an institution designated by him to take necessary measures, unless the agreement on the appointment procedure provides other means for appointment of arbitrator. Therefore, so far as the period of thirty days is concerned, it is not mentioned in Arb. p. Nos. 07/2010, 08/2010, 09/2010 & 10/2010 subsection (6). The period of limitation is only provided under subsections (4) and (5) of Section 11. As such, as per the statute, the period of limitation of thirty days cannot be invoked under subsection (6) of Section 11 of the Act." On a perusal of the above quoted observations of this court made in Ace Pipeline Contracts Private Limited, the reasons advanced in the orders passed by the High Court must be found to be a correct interpretation of the aforesaid provision and so far as the period of 30 days with regard to Section 11(6) is concerned, there is no doubt at all that thirty days limitation cannot be invoked as mandatory period under Section 11(6) of the Act. But a somewhat different view was expressed in a latter decision of this court in the case of Union of India vs. Bharat Battery Manufacturing Co. Pvt. Ltd., (2007) 7 SCC 684= 2007 SCACTC 437 (SC)=2007(3) Art. LR 282

(SC). Jn view of the difference of opinion of the two coordinate benches of this court, the matter—was referred to a Three Judse Bench in the—case—of Northern Railway Administration. Ministry of Railway vs. Patel Ensineerins Company Ltd.. (2008) in see 240=2008 SCACTC 480 (SC)=2008(3) Art. LR 349 (SC). in which the decision in Ace Pipeline Contracts Pvt. Ltd. was also referred to. Arijit Pasavat. J. fas His Lordship then was), headins the Three Judse Bench of this court, after considerins the scope and obiect of the Act varticularlv Section 11 of the Act, concluded the following (paras 1 and 13, p.354 of Arb. LR): "A bare reading of the scheme of Section 11 shows that the emphasis is on the terms of the agreement bein2 adhered to and/or siven effect as closely as possible. In other words, the ^ court may ask to do what has not been done. The court must first ensure that the remedies provided for are exhausted. It is true, as contended by Mr. Desai, that it is not mandatory for the Chief Justice or any person or institution desimated by him to appoint the named arbitrator or arbitrators. But at the same time, due resard has to be siven to the qualifications required by the asreement and other considerations. XXX XXX XXX In all these cases at hand the Hish Court does not appear to have focused on the requirement to have due regard to the qualifications required by the agreement or other considerations necessary to secure the appointment of an independent and impartial arbitrator. It needs no reiteration that appointment of the arbitrator or arbitrators named in the arbitration agreement is not a must, but while making the appointment the twin requirements of sub-section (8) of Section 11 have to be kept in view, considered and taken into account. If it is not done, the appointment becomes vulnerable. In the circumstances, we set aside the appointment made in each case, remit the matters to the Hish Court to make fresh appointments keeyins in view the parameters indicated above. "

¶10In the aforesaid decision in the case of Northern Railway Administration, Ariiit Pasavat, J. (as His Lordshiu then was), found that the Hish Court in the said case did not apvear to have focused on the reQuirement to have due resard to the Qualifications r required bv the asreement or other conditions | (_ necessary to secure the apyointment of an independent and impartial arbitrator. In the aforesaid decision, this court also concluded that since the requirement of sub-section (8) of Section 11 was not at all dealt with by the Hish Court in its order, the appointment of an arbitrator without dealing with sub-section (8) of Section 11 of the Act became vulnerable and accordinslv, such appointment was set aside. Similar is the position in ^ this case. In this case also, before appointing an arbitrator under Section 11(6) of the Act, the High Court had failed to take into consideration the effect of Section 11(8) of the Act as was done in Northern Railway Administration. IP In view of the discussions made hereinabove and particularly in view of the principles laid down by this Court in Northern Railway Administration, we set aside the impugned order and remand the case back to the Hwh Court for fresh decision of the application under Section 11(6) of the Act and while considering the application afresh, the High Court is directed to take into consideration the aforesaid decision of this Court. " (emphasis supplied) In view of the aforesaid judgment and Clause 25 of the Agreement, I am of the opinion that procedure, qualifications and other considerations stipulated in the agreement for appointment of an Arb. p. Nos. 07/2010, 08/2010, 09/2010 & 10/2010 L. independent and impartial Arbitrator have been followed while appointing Mr. S.K. Singhal as the Arbitrator. Even if there was some delay in appointment of an Arbitrator by the respondent, I hereby, in exercise of powers under Section 11 of the Act, 1996, appoint Shri S.K. Singhal, Arbitrator, Ministry of Urban Development, New Delhi, as the sole Arbitrator to adjudicate upon all the dispute between the parties. With the aforesaid observations, present petitions stand disposed of. \\J^ MANMOHAN,J MARCH 11, 2010 js

6 to 9 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ARB .P. 7/2010 HAPPY ELECTRICALS Petitioner Through: Mr. S.S. Sastry, Advocate with Mr. Rishi Manchanda, Advocate. versus CENTRAL PUBLIC WORKS DEPARTMENT (CPWD) Respondent Through: Mr. Atul Nanda, Advocate with Ms. Rameeza Hakeem, Mr. Gaurav Gupta, Mr. Sumeer Sodhi, Mr. Malika Gahlot, Ms. Sugandha and Mr. Sanjay Bhardwaj, Advocates. WITH + ARB.P. 8/2010 HAPPY ELECTRICALS Petitioner Through: Mr. S.S. Sastry, Advocate with Mr. Rishi Manchanda, Advocate. versus CENTRAL PUBLIC WORKS DEPARTMENT Respondent Through: Mr. Atul Nanda, Advocate with Ms. Rameeza Hakeem, Mr. Gaurav Gupta, Mr. Sumeer Sodhi, Mr. Malika Gahlot, Ms. Sugandha and Mr. Sanjay Bhardwaj, Advocates. Certify that the digital file and physical file have been compared and the digital data is as per the physical file and no page is missing. WITH + ARB .P. 9/2010 M/S HAPPY ELECTRICALS Petitioner Through: Mr. S.S. Sastry, Advocate with Mr. Rishi Manchanda, Advocate. versus CENTRAL PUBLIC WORKS DEPARTMENT Respondent Through: Mr. Atul Nanda, Advocate with Ms. Rameeza Hakeem, Mr. Gaurav Gupta, Mr. Sumeer Sodhi, Mr. Malika Gahlot, Ms. Sugandha and Mr. Sanjay Bhardwaj, Advocates. AND + ARB.P. 10/2010 HAPPY ELECTRICALS Petitioner Through: Mr. S.S. Sastry, Advocate with Mr. Rishi Manchanda, Advocate. versus CENTRAL PUBLIC WORKS DEPARTMENT (CPWD) Respondent Through: Mr. Atul Nanda, Advocate with Ms. Rameeza Hakeem, Mr. Gaurav Gupta, Mr. Sumeer Sodhi, Mr. Malika Gahlot, Ms. Sugandha and Mr. Sanjay Bhardwaj, Advocates. ."C- CORAM: HON'BLE MR. JUSTICE MANMOHAN ^