Court No. - 7
Case :- ARBITRATION AND CONCILI. APPL.U/S11(4) No. - 11 of 2018 Applicant :- M/S Dwarika Projects Ltd. Thru V.K. Singh Opposite Party :- State Of U.P. And 4 Others Counsel for Applicant :- Rakesh Pande Counsel for Opposite Party :- C.S.C.
Hon'ble Saumitra Dayal Singh,J.
1. The present application under Section 1 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) has been filed by the applicant seeking appointment of a substitute arbitrator after declaring the mandate of the earlier arbitrator to have been terminated.
2. Briefly, the applicant had entered into a contract with the Superintending Engineer, Public Works Department, Moradabad Circle, Moradabad for execution of package No. U.P. 6002 under the Pradhan Mantri Gram Sadak Yojna against Contract Bond No. 03/S.E.(2002-03) dated 02.07.2002. The contract is stated to be governed by the General Conditions of Contract, G.P.W.-9 (Revised). Admittedly, under Clause 32(c)(3) of the General Conditions of Contract remedy of arbitration was provided for redressal of any dispute that may arise between the parties with respect to the aforesaid contract.
3. With reference to the dispute that had arisen between the parties, the applicant appears to have issued a notice to the Chief-Engineer, Public Works Department, Moradabad on 28.06.2005 for appointment of an arbitrator. However, no such arbitrator was appointed. Then, the applicant filed arbitration application under Section 1 of the Act No. 31 of 2006 before this Court. It was allowed by order dated 20.12.2011 directing the authority of the State to appoint arbitrator under Section 32 of the General Conditions of the contract. On 16.03.2012, for the first time, the Engineer-in-Chief of the Public Works Department appointed an arbitrator in compliance of the aforesaid order passed by this Court.
4. It is the case of the applicant that no arbitration proceedings took place and the arbitrator simply kept the matter pending without conducting any proceedings. In such circumstances, a notice is claimed to have been issued by the applicant on 26.07.2017 for appointment of substitute arbitrator.
5. Failing such appointment being made, the present application has been filed for the following relief:-
"It is therefore most respectfully prayed that this Hon'ble Court may be pleased to decide termination of the mandate of an Arbitrator (opposite party no. 3) under Section 14(2) of the Arbitration and Conciliation Act, 1996 and to consequently appoint fresh arbitrator otherwise, the applicant-petitioner will suffer irreparable loss, and/or be pleased to pass such other and further order as this Hon'ble Court may deem fit and proper in the circumstances of the case."
6. Heard Sri Rakesh Pandey, learned counsel for the applicant alongwith Sri Ved Prakash Singh and Sri Jagdish Mishra, learned Standing Counsel for the State.
7. Learned Counsel for the applicant submits, undisputedly no arbitration proceedings was conducted by the arbitrator appointed on 16.03.2012 and no award came into existence till 13.10.2017 when the applicant sought appointment of a second arbitrator in view of the mandate of the first arbitrator having come to an end. He would submit that five years delay in conducting the arbitration proceedings is undisputably undue delay. Therefore the mandate of the arbitrator stood terminated upon such lapse of time. Reference has been made to Section 14(1)(a) of the Act and reliance in that regard placed on a decision of the Supreme Court in the case of Union of India Vs. Uttar Pradesh State Bridge Corporation Limited 2015 (2) SCC 52. The undue delay in conducting the proceedings therefore terminated the mandate of the arbitrator. Then relying on Section 15(2) of the Act it has been submitted that it is for this Court to appoint a substitute arbitrator on the present application.
8. Sri Jagdish Mishra, learned Standing Counsel has opposed the present application and submitted that in the first place it is wrong to submit that the applicant ever issued second notice dated 13.10.2017 for appointment of a substitute arbitrator. In fact, by that application, the applicant implored the first arbitrator to proceed in the matter and fix an early date of hearing. It is therefore submitted that the applicant never treated the mandate to have terminated and in fact it continued to approach the first arbitrator to conduct and conclude those proceedings. Then, it has been submitted for declaration of the mandate to have terminated, the provisions of Section 14(2) would remain applicable. Under that provision such declaration may be made by the "Court". The term 'Court' is defined under Section 2 (1)(e) of the Act as under:
"Definitions.-(1) In this Part, unless the context otherwise requires,-
(a) .....
(e) "Court" means -
(i) in the case of an arbitration other than international commercial arbitration, the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes;
(ii) in the case of international commercial arbitration, the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, and in other cases, a High Court having jurisdiction to hear appeals from decrees of Courts subordinate to that High Court."
9. It is then submitted that the Allahabad High Court is not a Court of original civil jurisdiction except for the limited jurisdiction in testamentary cases and suits. It is therefore submitted that this Court though empowered to appoint an arbitrator under Section 1 and a substitute arbitrator in terms of Section 15, however that exercise have to rest subject to a declaration being made by the competent civil court as to the mandate of the first arbitrator having expired. Then it has also been submitted, during the pendency of the present petition, the first arbitrator has proceeded to pronounce an award dated 19.01.2018, a copy of which has been annexed with the supplementary affidavit filed by the applicant. The award having been thus pronounced, it is submitted that the present writ petition has become infructuous.
10. Responding to the aforesaid submissions, Sri Pandey in rejoinder affidavit would submit, once the application had been filed by the applicant seeking termination of the mandate of the first arbitrator on 11.01.2018, the award that has been rendered thereafter on 19.01.2018 is a nullity and the same may be ignored. Alternatively, it has been submitted that the said award has been reached without conducting any proceedings at all and without issuing any notice to the applicant. For that also the award is claimed to be nullity.
11. Having heard learned counsel for the parties, it is seen that the question whether the arbitrator had the mandate to make the award dated 19.01.2018 would hing on the finding whether his mandate stood terminated before that date. The provisions of Section 14 of the Act though clearly indicate that the mandate of a duly appointed arbitrator shall terminate if he fails to act without undue delay, and a delay of five years was considerable, however sub-section (2) of Section 14 would also provide that if any controversy remains, the ground for termination of mandate contemplated under Clause (a) of Sub-Section (1) of that section may be decided by the Court.
12. Therefore, in the first place, if the parties to the dispute are in agreement that the arbitrator had failed to act without undue delay, the mandate may stand terminated upon such concurrence between the parties without either parties having gone to any Court of law seeking any declaration. However, if the parties are at variance as to whether the mandate had terminated or not, the question would have to be determined in accordance with the provisions of Section 14(2) of the Act. Consequently, that declaration would have to be necessarily made by the Court. The term Court having been defined for the purpose of the Act under Section 2(e) of the Act means the Principal of Civil Court of original jurisdiction. The legislative intent is clear in so far as the jurisdiction under Section 14(2) has been vested with such Court only.
13. Clearly, in the instant case parties are at variance as to whether the mandate stood terminated. Also, that dispute would require evidence to be led before a finding may be recorded. Normally, that cause may not be encouraged by this Court.
14. The Allahabad High Court clearly is not a Principal Civil Court of Original jurisdiction. It has limited original civil jurisdiction in testamentary matters such that no suit for relief similar to that sought by the applicant in these arbitration proceedings may be instituted before this Court, for that reason.
15. Consequently, the jurisdiction to make a declaration under Section 14 (2) of the Act would continue to exist with the Principal Civil Court of original jurisdiction at Moradabad.
16. In so far as, no declaration has yet been made by the Court as defined under the Act, the power of this Court under Section 1 read with Section 15(2) of the Act to appoint a substitute arbitrator does not come to life till that declaration is made. The Court must therefore stay its hand in seeking to appoint a substitute arbitrator at this stage in view of the clear variance of stand taken by the parties as to termination of mandate of the arbitrator appointed as a consequence of the earlier order of this Court dated 20.12.2011 in arbitration application no. 31 of 2006.
17. As to the objections raised by the learned counsel for the applicant that the award is a nullity for grounds that have been raised, that issue in any case would remain outside the general proceedings, it being a matter that may be raised in the proceedings under Section 34 of the Act.
18. Therefore, leaving all course open to the applicant as may be available in law, the present application must fail and it is accordingly rejected. No order as to costs.
Order Date :- 29.11.2018 S.Chaurasia