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S.B. Arbitration Application No.59/2007
M/s. Indeera Builders (petitioner) Ltd.
vs
Union of India & Ors
DATE OF ORDER: 19.5.2009
HON'BLE MR. PRAKASH TATIA, J.
Mr. SD Vyas, for the petitioner.
Mr. Kamal Dave, for the respondents. .
Heard learned counsel for the parties.
The contract was entered into between the applicant and
Union of India through Chief Engineer (Construction) North
Western Railway, Jaipur on 23.9.2004. By this contract, the
petitioner was given some work contract and the period of the
contract was 11 months and the work was to be completed by
14th June, 2005. According to the petitioner due to the fault of
the respondent-Railway Department and circumstances beyond
the control of the petitioner, the work period was sought to be
extended upto Dec., 2005, but it was extended only upto
14.8.2005. According tot he petitioner, he was in process of
completing the work, but the contract was terminated on 5th
July, 2005 pre-maturely and, therefore,, the petitioner suffered
loss. The petitioner alleged that the termination of the contract
was absolutely illegal and it should not have been terminated at
the fag end of the completion of the work. Be it as it may be,
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the dispute arises between the parties as petitioner has sought
claims referred in this petition. The petitioner requested the
respondent to appoint the arbitrator by serving a notice vide
letters dated 9th Sept., 2005, 30th Dec., 2005 and 16th Jan.,
2006. The respondent refused to appoint the arbitrator by
communication dated 21.3.2006, copy of which has been placed
on record as Annex.C. The respondent refused to appoint the
arbitrator on the ground that the respondents examined the
claim of the petitioner and found that most of the claims covered
under excepted matters as described in clause No.63 of the
General Conditions of Contract. Apart from above, it has been
stated that the petitioner left the work incomplete and this work
was terminated at petitioner’s risk and cost, therefore, earnest
money of Rs.50,000/- and security deposit of Rs.2.50 lacs were
forfeited as per clause no.16 of the General Conditions of
Contract. It is also stated that there is no price escalation clause
in this contract, thus your claim no.6 is also beyond the scope of
contract. It is also stated that petitioner failed to execute the
work in stipulated time period, thus, the balance work was
executed from other agency at the risk and cost of the petitioner
including liability for the petitioner of Rs.14,18,992/-.
Learned counsel for the petitioner submits that there is no
dispute that there is arbitration clause and whether the claim
falls under the excepted matters is concerned, that also can be
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decided by the arbitrator and when respondent themselves
stated that “most of the claims cover under excepted matters”
then admittedly, there are other claims of the petitioner which
were raised before the respondent were not the claims falling
under the “excepted matters”. It is submitted that petitioner is
disputing the respondent’s contention that any of the matter is
falling under the “excepted matters” and, therefore, cannot be
referred to arbitrator. It is also submitted that instead of
referring the dispute to the arbitrator, it appears that
respondents themselves had decided the dispute which they
could not have decided.
Learned counsel for the respondent submitted that the
“excepted matters” cannot be referred to the arbitrator in view
of clause 63 of the General Conditions of the Contract. It is
submitted that even if any arbitrator is appointed then that is
required to be appointed as per clause 64(3)(a)(iii), which
provides that no person other than a gazetted Railway Officer
should act as an Arbitrator/Umpire and if for any reason, that is
not possible, the matter is not to be referred to arbitration at all.
Therefore, only a gazetted Railway Officer can be appointed as
arbitrator.
I considered the submissions of learned counsel for the
parties and perused the facts of the case.
From communication sent by the respondent to the
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petitioner dated 21.3.2006 even it is clear that there is no
dispute that there is arbitration clause in the contract. Even as
per the respondents there are some of the claims which are not
covered under the alleged “excepted matters” so as to deny the
appointment of arbitrator. It is disputed by the petitioner that
any of the claim falls in the category of “excepted matters” and
whether all claim is falling in the said category of “excepted
matters” can also be decided by the arbitrator. It appears that
respondents by communication dated 21.3.2006 have decided
some of the core issue for which petitioner prayed for
appointment of arbitrator that clearly demonstrate that there is
dispute between the parties in the matter where by the contract
provides for settlement of dispute by the arbitral proceedings.
Since the respondents failed to appoint the arbitrator
within time, therefore, this petition is allowed and the
respondents are directed to appoint the arbitrator within a period
of two months from today by keeping in mind clause 64(3)(a)(iii)
of the General Conditions of Contract Regulations and
Instructions for Tenders and Standard Forms of Contract and the
arbitrator shall decide the matter expeditiously.
(PRAKASH TATIA), J.
c.p.goyal/-