IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL No. 248 of 1989 For Approval and Signature:
HONOURABLE THE ACTING CHIEF JUSTICE MR.BHASKAR BHATTACHARYA HONOURABLE MR.JUSTICE J.B.PARDIWALA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment ?
4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?
5 Whether it is to be circulated to the civil judge ?
========================================================= STATE OF GUJARAT & 2 - Appellant(s) Versus SHETH CONSTRUCTION CO & 1 - Defendant(s) ========================================================= Appearance :
GOVERNMENT PLEADER for Appellant(s) : 1 - 3. MR GT DAYANI for Defendant(s) : 1 - 2.
========================================================= CORAM :
HONOURABLE THE ACTING CHIEF JUSTICE MR.BHASKAR BHATTACHARYA and HONOURABLE MR.JUSTICE J.B.PARDIWALA Date : 31/01/2012 ORAL JUDGMENT (Per : HONOURABLE THE ACTING CHIEF JUSTICE MR.BHASKAR BHATTACHARYA)
1. This appeal under Section 39 of the Indian Arbitration Act, 1940 (hereinafter referred to as 'the Act') is at the instance of the State-respondent in a proceeding substantially under Section 20 of the Act and is directed against an order dated August 23, 1988 passed by the Civil Judge, Senior Division, Narol in Special Civil Suit No.43 of 1988, thereby allowing such application and appointing one Shri J.C. Patel, Superintending Engineer (Retired) as Sole Arbitrator to resolve the dispute between the parties in accordance with the provision of Clause 52 of the Tender Agreement, subject to deposit of Rs.5,000/- by the plaintiff with the State Government towards the costs of arbitration within one month.
2. Being dissatisfied, the State of Gujarat has come up with the present appeal.
3. After hearing the learned counsel for the parties and after going through the materials on record, we find that there is no dispute that there was a contract agreement for doing various jobs as specified therein and Clause 52 of the Tender Agreement provides with Arbitration, which is quoted below :
“Arbitration :-
All the disputes or differences in respect of which the decision has not been final and conclusive shall be referred for arbitration to a sole arbitrator appointed as follows :-
Within thirty days of receipt of notice from the contractor of his intention to refer the dispute to arbitration, the Chief Engineer, Irrigation Project shall send to the Contractor a list of three officers of the rank of Superintending Engineer or higher, who haves not been connected with the work under this contract. The Contractor shall within fifteen days of receipt of this list select and communicates to the Chief Engineer the name of one officer from the list who shall then be appointed as the sole arbitrator. If the Contractor fails to communicates his selection of name within the stipulated period the Chief Engineer shall without delay select one officer from the list and appoint him as the sole arbitrator. If the Chief Engineer fails to send such a list within thirty days, as stipulated, the Contractor shall send a similar list to the Chief Engineer within fifteen days. The Chief Engineer shall then select one officer from the list and appoint him as the sole arbitrator within fifteen days. If the Chief Engineer fails to do, so the Contractor shall communicate to the Chief Engineer the name of the officer from the list, who shall than be the sole arbitrator. The Arbitration shall be conducted in accordance with the provisions of the Indian Arbitration Act, 1940, or any statutory modification therefor. The decision of the sole arbitrator shall be final and biding on the parties thereof. The arbitrator shall determine the amount of costs of arbitration to be accorded to either parties.
Performance under the contract shall continue during the arbitration proceedings and payments due to the contractor shall not be withheld unless they are the subject matter of the arbitration proceedings.
All awards shall be in writing and in case of awards amounting to Rs.1.00 lakh and above, such awards shall state the reasons for the amount awarded.
Neither party is entitled to bring a claim to arbitration if the arbitration has not been appointed before the expiration of thirty days after defect liability period.”
4. The grievance of the respondent before us was that inspite of communication to the Chief Engineer in terms of the agreement, he refused to nominate any Arbitrator, the plaintiff on his own appointed an Arbitrator and consequently, the plaintiff came up before the Court for causing the defendant Nos.1 to 3 to file an original agreement between the parties and after filing of the same, the Court should hold and declare that the appointment of Brigadier Shri D.R. Kathuria, a retired Chief Engineer, as an Arbitrator appointed by the plaintiff was legal and valid with further direction upon the said Shri D.R.Kathuria to proceed with the reference and declare the award within the stipulated period.
5. The proceeding was contested by the State- respondent, thereby denying the material allegations made in the application under Section 20 of the Act and the main defence of the defendant was that the contractor was requested to start the work vide letter dated February 22, 1985 by the Executive Engineer concerned within the time limit of 30 months for completion of the work and the contractor was required to complete the work on or before August 21, 1987 and in this case the demand of arbitration had fallen within the category of time barred issue as per the provision of the agreement. Further, stand of the defendant was that even if it was assumed for the sake of argument that the demand of arbitration was legal, in that event, the Arbitrator should be appointed from the three persons mentioned by the defendant as pointed out in the written statement.
6. The learned trial Judge on consideration of the materials on record came to the conclusion that there existed a valid agreement of arbitration between the parties and that the claim was not at all barred. The Court, however, was of the view that the Arbitrator appointed by the plaintiff should not be permitted to deal with the arbitration and in such circumstances, the Court itself appointed one Dr.J.C. Patel, a retired Superintending Engineer, from the panel of the defendant.
7. It may not be out of place to mention here that during the pendency of this appeal Dr.J.C. Patel has died.
8. In such circumstances, after hearing the learned counsel for the parties and after going through the materials on record, we affirm the other findings of the learned trial Judge on the questions of existence of the agreement and that the claim of demand of arbitration was not time barred, but in the facts of the present case, we simply affirm that the portion of the order by which the learned trial Judge directed filing of the agreement and thereafter, we direct the plaintiff to proceed in accordance with Clause 52 of the contract for appointment of arbitrator. In other words, the plaintiff will now make a fresh demand for appointment of an Arbitrator in accordance with the terms of the agreement.
9. With above observation, this appeal is disposed of. There will be, however, no order as to costs. The Record and Proceedings, if any called for, be returned to the Court below.
(Bhaskar Bhattacharya, Acting C.J.)
(J.B. Pardiwala, J.)
Aakar