IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
Arbitration Case No. 62 of 2007
Decided on : 30.1.2009
M/s Krishna Construction Co. ....Petitioner
VERSUS
Engineer-in-Chief, Haryana and others ....Respondent
CORAM:-HON’BLE MR. JUSTICE HEMANT GUPTA.
1. Whether Reporters of local papers may be allowed to see the judgment ?
2. To be referred to the Reporters or not ?
3. Whether the judgment should be reported in the Digest ?
-.-
Present:- Shri Manoj Kumar Sood, Advocate, for the petitioner.
Shri Ajay Gupta, Additional AG, Haryana.
HEMANT GUPTA, J (Oral).
The petitioner has sought appointment of an Arbitrator in
respect of non-payment of due amount of contract for providing Hard
Shouldering on Palwal Yamnua Bridge Road in District Faridabad.
The petitioner was allotted a contract for providing Hard
Shouldering on Palwal Yamuna Bridge Road (0 to 15.41 Kilometres), in
Faridabad District, amounting to Rs.48.50 lacs approximately, vide letter of
allotment dated 5.5.1999. The work was to be completed within six months.
As per the petitioner, the specification of the Draft Notice Inviting Tender,
was changed, which increased the cost. The petitioner completed 10% of the
total agreed contract and a sum of Rs.13 lacs became payable, but due to
Arbitration Case No. 62 of 2007 (2)
shortage of LOC/funds, the payment was not made in time. The work came
to stand still and that instead of making payment, the respondents imposed
penalty under Clause-II of the contract agreement. The material brought for
the purpose of execution of the work could not be utilised and the labour
also remained idle due to change of specification and delay in taking
decision by the department. The bitumen for execution of the work has also
not been issued and on account of shortage of LOC, there was no chance to
complete the work. Subsequently, the estimate of the road was proposed to
be de-sanctioned and a fresh estimate with the changed specification was
prepared. The changed specification was not within the scope of the
contract agreement. Thus, the petitioner raised a claim of Rs.16.49 lacs,
excluding interest and cost on account of various disputes said to be arising
between the parties. The petitioner submitted a final bill dated 23.8.2004
and made a request for appointment of an Arbitrator on 23.9.2004. On
account of failure of the respondents to appoint an Arbitrator, the petitioner
invoked the jurisdiction of this Court vide the present petition filed on
24.4.2007.
A perusal of the documents attached with the petition shows
that on 23.8.2004, the first and final bill amounting to Rs.56,668.89p was
accepted, though the said amount was adjusted towards the amount of work
done at the risk and cost of the petitioner.
In reply, it has been pointed out that the petitioner has not
deposited the security as per Clause 25-A of the contract agreement
amounting to Rs.1,27,050/-, therefore, the present petition is not
maintainable. It is also pointed out that the petition for appointment of an
Arbitrator is badly time barred as the work was completed by other Agency.
Arbitration Case No. 62 of 2007 (3)
It is pointed out that the petitioner failed to complete the work despite good
persuasion and under compulsive circumstances, the respondents have
initiated action under Clause-II of the agreement as the petitioner miserably
failed to complete the work within the stipulated period as per the
agreement. It is pointed out that the Engineer-in-Chief , Haryana, PWD
(B&R), is empowered for appointment of an Arbitrator, subject to deposit of
security @ 7.5% of the amount claimed by the petitioner. The petitioner has
not deposited the security even when called upon to do so by the
respondents vide letter dated 26.10.2005.
During the course of hearing, learned counsel for the petitioner
has stated that the petitioner shall deposit the necessary security amount
within a period of two months and therefore, the respondents are bound to
appoint an Arbitrator. As per the respondents, the Arbitrator is required to
be appointed by the Engineer -in-Chief, Haryana, PWD (B&R) Branch,
Chandigarh in terms of sub-Clause 2 of Clause 25-A of the agreement. The
relevant Clause reads as under:-
“All disputes of differences in respect of which the
decision is not final and conclusive shall at the request in
writing of either party, made in communication sent
through registered A.D. Post be referred to the sole
arbitration of any serving Superintending Er. or Chief Er.
of Haryana PWD B & R Branch to be nominated by
designation by the Engineer-in-Chief Haryana PWD B &
R Branch at the relevant time, it will be no objection to
any such appointment that the arbitrator so appointed is a
Government servant or that he had to deal with the
matters to which the contract relates and that in the
course of his duties as a Government servant he had
expressed his views on all or any of the matters in
Arbitration Case No. 62 of 2007 (4)
dispute. The Arbitrator to whom the matter is originally
referred being transferred or vacating his office his
successor in office as such shall be entitled to proceed
with the reference from the stage at which it was left by
his predecessor.
In case the arbitrator nominated by the
Engineer-in-Chief is unable or unwilling to act as such
for any reason whatsoever the Engineer-in-Chief shall be
competent to appoint and nominate any other
Superintending Engineer of chief Engineer as the case
may be as arbitrator in his place and the Arbitrator so
appointed shall be entitled to proceed with the
reference.”
A perusal of the record shows that the respondents have not
refused to appoint an Arbitrator in terms of sub-Clause 2 as reproduced
above. It was only on account of non-deposit of security amount in terms of
Sub-Clause 7 of Clause 25-A, the Arbitrator could not be appointed by the
respondents. Therefore, I do not find any reason to appoint an Arbitrator
other than in terms of the agreement entered between the parties.
In view of the above, the present petition is allowed. The
Engineer-in-Chief is directed to appoint an Arbitrator in terms of the
agreement between the parties on deposit of the security amount within the
period of two months.
Consequently, the petition stands disposed of accordingly.
(Hemant Gupta)
Judge
30.1.2009
ds