{"id":14374,"date":"2010-05-20T00:00:00","date_gmt":"2010-05-19T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/t-j-augusthy-vs-the-chairman-on-20-may-2010"},"modified":"2018-01-19T14:36:44","modified_gmt":"2018-01-19T09:06:44","slug":"t-j-augusthy-vs-the-chairman-on-20-may-2010","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/t-j-augusthy-vs-the-chairman-on-20-may-2010","title":{"rendered":"T.J.Augusthy vs The Chairman on 20 May, 2010"},"content":{"rendered":"
Kerala High Court<\/div>\n
T.J.Augusthy vs The Chairman on 20 May, 2010<\/div>\n
       \n\n  \n\n  \n\n \n \n  IN THE HIGH COURT OF KERALA AT ERNAKULAM\n\nAR.No. 35 of 2009()\n\n\n1. T.J.AUGUSTHY, S\/O.JOSEPH,\n                      ...  Petitioner\n\n                        Vs\n\n\n\n1. THE CHAIRMAN, COCHIN PORT TRUST,\n                       ...       Respondent\n\n2. CHIEF ENGINEER,\n\n                For Petitioner  :SRI.SAJI MATHEW\n\n                For Respondent  :SRI.B.S.KRISHNAN (SR.)\n\nThe Hon'ble MR. Justice K.T.SANKARAN\n\n Dated :20\/05\/2010\n\n O R D E R\n                         K.T.SANKARAN, J.\n            ------------------------------------------------------\n               ARB. REQUEST NO. 35 OF 2009\n            ------------------------------------------------------\n             Dated this the 20th day of May, 2010\n\n                              O R D E R\n<\/pre>\n
       When the Arbitration Request came up for admission, the<\/p>\n
learned Judge who heard the matter passed the following order on<\/p>\n
10.12.2009:\n<\/p>\n<\/p>\n
            “Learned counsel for parties, having regard to the<\/p>\n
       issues and the amount involved, would make an<\/p>\n
       endeavour to have this matter settled even without<\/p>\n
       request for arbitration.\n<\/p><\/blockquote>\n
<\/blockquote>\n
            Post in the 3rd week of January, 2010.”\n<\/p><\/blockquote>\n
<\/blockquote>\n
The matter was not settled.\n<\/p>\n<\/p>\n
       2. The applicant was appointed as a contractor for the work of<\/p>\n
“raising VTMS Project site at Puthuvypeen” as per Annexure A1<\/p>\n
agreement dated 21.4.2008, for an amount of Rs.18,84,146\/-. The<\/p>\n
estimated cost of the work was Rs.24.02 lakhs. The work was not<\/p>\n
completed within time. Extension of time was requested for. Time<\/p>\n
was extended. The work was completed on 20.8.2008. As per<\/p>\n
ARB. REQUEST NO.35 OF 2009<\/p>\n
                                   :: 2 ::\n<\/p>\n
Annexure A4 dated 6.10.2008, extension of time for completion of<\/p>\n
the work was granted up to 20.8.2008 and the contract period was<\/p>\n
extended up to 19.12.2008. However, this was done with a rider of<\/p>\n
reserving the right of Cochin Port Trust to claim compensation for the<\/p>\n
delayed performance of the contract. It would appear that the Chief<\/p>\n
Engineer took a decision as per the order dated 27.6.2008 to deduct<\/p>\n
Rs.1,88,415\/-, the amount being 10% of the contract amount, from<\/p>\n
the amount payable to the contractor, as compensation to the Cochin<\/p>\n
Port Trust on account of the delayed execution of the work.     (The<\/p>\n
order passed by the Chief Engineer is not produced. The applicant<\/p>\n
stated in the Arbitration Request that on receiving Annexure A2<\/p>\n
dated 23.5.2008, he submitted Annexure A3 reply dated 2.7.2008.<\/p>\n
This does not appear to be correct. The reference in Annexure A3 is<\/p>\n
T-10\/R-C\/2007-C dated 27.6.2008. That is not Annexure A2.           In<\/p>\n
Annexure A3, the prayer is to set aside the order dated 27.6.2008.)<\/p>\n
The applicant filed Annexure A6 appeal dated 27.5.2009 against the<\/p>\n
decision of the Chief Engineer. The appeal was to be disposed of<\/p>\n
within thirty days by the Chairman. The Chairman did not do so.<\/p>\n
Therefore, the applicant sent Annexure A7 notice dated 8.7.2009 to<\/p>\n
the Chairman requesting to appoint an independent Arbitrator to<\/p>\n
adjudicate the dispute listed in Annexure A7 within fifteen days from<\/p>\n
ARB. REQUEST NO.35 OF 2009<\/p>\n
                                     :: 3 ::\n<\/p>\n
the date of receipt of the notice. It is stated that no reply was sent<\/p>\n
by the Chairman to Annexure A7. The applicant, therefore, filed the<\/p>\n
Arbitration Request.     The prayer in the Arbitration Request is to<\/p>\n
appoint an independent Arbitrator for resolution of the disputes and<\/p>\n
differences as specified in Annexures A6 and A7.<\/p>\n
      3. The applicant has produced a copy of clause 25 of the<\/p>\n
general conditions of contract for civil works in Cochin Port Trust<\/p>\n
(Annexure A9).      It is submitted that going by Annexure A9, the<\/p>\n
dispute has to be referred to arbitration.<\/p>\n
      4. A counter affidavit is filed by the second respondent, the<\/p>\n
Chief Engineer. In paragraph 5 of the counter affidavit, it is stated as<\/p>\n
follows:\n<\/p>\n<\/p>\n
             “5. It is submitted that applicant did not submit<\/p>\n
       the final bill and it is not paid. Since this respondent<\/p>\n
       suffered loss due to the fact that the work was not<\/p>\n
       completed in time, Annexure 5 was issued levying an<\/p>\n
       amount of Rs.1,80,415\/- as compensation.             It is<\/p>\n
       submitted that against Annexure V the applicant filed an<\/p>\n
       appeal. Even though the petitioner was requested to<\/p>\n
       appear before the Chairman for personal hearing, the<\/p>\n
ARB. REQUEST NO.35 OF 2009<\/p>\n
                                     :: 4 ::\n<\/p><\/blockquote>\n
      petitioner appeared and informed that he had already<\/p>\n
      moved Hon’ble High Court and therefore the conditions<\/p>\n
      stipulated in Cl.25 of the general conditions of the<\/p>\n
      contract will not be of any help to the applicant. Copy of<\/p>\n
      the letter dated 12.1.2010 issued to the petitioner<\/p>\n
      requesting him to appear before the Chairman for<\/p>\n
      personal hearing.      A reading of Cl.25 of the general<\/p>\n
      conditions of the contract will clearly show that the<\/p>\n
      above claim of the applicant will not fall within the<\/p>\n
      conditions contained in Cl.25 of the general conditions<\/p>\n
      of the contract. It is respectfully submitted that Cl.25(2)<\/p>\n
      clearly states that the party invoking arbitration shall<\/p>\n
      gave list of disputes with amounts claimed in respect of<\/p>\n
      each such dispute along with notice for appointment of<\/p>\n
      arbitrator and giving reference to the rejection by the<\/p>\n
      Chairman of the appeal. Annexure 6 is the appeal filed<\/p>\n
      by the applicant. A reading of Annexure 6 will clearly<\/p>\n
      show that the applicant has not complied with Cl.25(2)<\/p>\n
      of the general conditions of contract. Cl.25(2) further<\/p>\n
      states that “it is also term of this contract that no person<\/p>\n
      other than a person appointed by the Board as aforesaid<\/p>\n
      should act as arbitrator and if for any reasons is not<\/p>\n
      possible, the matter shall not be referred to arbitration at<\/p>\n
      all.”<\/p><\/blockquote>\n
      5.    Annexure A9 provides for referring the dispute for<\/p>\n
adjudication through Arbitration by a sole arbitrator appointed by the<\/p>\n
ARB. REQUEST NO.35 OF 2009<\/p>\n
                                   :: 5 ::\n<\/p>\n
Board. The following clauses in Annexure A9 are also relevant.<\/p>\n
They are:\n<\/p>\n<\/p>\n
           “It is a term of this contract that the party invoking<\/p>\n
     arbitration shall give a list of disputes with amounts<\/p>\n
     claimed in respect of each such dispute along with the<\/p>\n
     notice for appointment of arbitrator and giving reference<\/p>\n
     to the rejection by the Chairman of the appeal.<\/p>\n<\/blockquote>\n
           It is also a term of this contract that no person<\/p>\n
     other than a person appointed by the board as aforesaid<\/p>\n
     should act as arbitrator and if for any reason that is not<\/p>\n
     possible, the matter shall not be referred to arbitration at<\/p>\n
     all.\n<\/p><\/blockquote>\n
<\/blockquote>\n
           It is also a term of this contract that if the<\/p>\n
     contractor does not make any demand for appointment<\/p>\n
     of arbitrator in respect of any claims in writing as<\/p>\n
     aforesaid within 120 days of receiving the intimation<\/p>\n
     from the Engineer-in-charge that the final bill is ready for<\/p>\n
     payment, the claim of the contractor, shall be deemed to<\/p>\n
     have been waived and absolutely barred and the board<\/p>\n
     shall be discharged and released of all liabilities under<\/p>\n
     the contract in respect of these claims.<\/p><\/blockquote>\n
           The Arbitration shall be conducted in accordance<\/p>\n
     with the provisions of the arbitration and conciliation Act,<\/p>\n
ARB. REQUEST NO.35 OF 2009<\/p>\n
                                     :: 6 ::\n<\/p>\n
      1996 (26 of 1996) or any statutory modifications or re-<\/p>\n
      enactment thereof and the rules made thereunder and<\/p>\n
      for the time being in force shall apply to the arbitration<\/p>\n
      proceeding under this clause.”\n<\/p>\n<\/p>\n
      6. The learned counsel for the respondents submitted that<\/p>\n
Annexure A9 provides for the procedure for appointment of the<\/p>\n
arbitrator and the manner of appointing the arbitrator. Only after the<\/p>\n
appeal is disposed of by the Chairman, the contractor could invoke<\/p>\n
the arbitration clause.     An independent arbitrator cannot be<\/p>\n
appointed and the arbitrator should be appointed in terms of clause<\/p>\n
25. It is also contended that since the Chairman has not taken any<\/p>\n
decision in the matter, the Arbitration Request is premature.<\/p>\n
      7. I am not inclined to accept the contention raised by the<\/p>\n
respondents that the Arbitration Request cannot be entertained for<\/p>\n
appointing an arbitrator or taking such measures as provided in<\/p>\n
Section 11 of the Arbitration and Conciliation Act. In 2005 (1) KLT<\/p>\n
763 (National Thermal Power Corporation Ltd. v. Raghul<\/p>\n
Constructions (P) Ltd.)<\/a>      a Division Bench of this Court held as<\/p>\n
follows:\n<\/p>\n
ARB. REQUEST NO.35 OF 2009<\/p>\n
                                    :: 7 ::\n<\/p>\n
            “7. S.11(6) deals with cases where there is an<\/p>\n
     appointment procedure agreed to between the parties.<\/p>\n
     If a party fails to act as required under that procedure,<\/p>\n
     party may request the Chief Justice or any person or<\/p>\n
     institution designated by him to take necessary measure<\/p>\n
     for securing the appointment. So also, under sub-s.(4)<\/p>\n
     of S.11, if two appointed arbitrators fail to agree on the<\/p>\n
     third arbitrator within thirty days from the date of their<\/p>\n
     appointment, then also the Chief Justice upon the<\/p>\n
     request of a party or any person designated by him can<\/p>\n
     make appointment. In sub-s.(5) of S.11, the wording<\/p>\n
     used is appointment by the Chief Justice. However, by<\/p>\n
     sub-s.(6) of S.11, the Chief Justice has to take<\/p>\n
     necessary measure for securing the appointment. If the<\/p>\n
     party fails to act as required under that procedure and if<\/p>\n
     any party requests the Chief Justice or any person or<\/p>\n
     institution designated by him to take the necessary<\/p>\n
     measure, the Chief Justice or any person or institution<\/p>\n
     has    to   take    necessary    measures    for  securing<\/p>\n
     appointment. So also the parties or the two appointed<\/p>\n
     arbitrators fail to reach an agreement expected of them<\/p>\n
     under that procedure, a party may request the Chief<\/p>\n
     Justice to take necessary measures for securing<\/p>\n
     appointment.      The expression “necessary measures”<\/p>\n
     and the expression “securing appointment” are absent in<\/p>\n
     a case where there is no agreed procedure. In a case<\/p>\n
     where there is no agreed procedure the Chief Justice<\/p>\n
ARB. REQUEST NO.35 OF 2009<\/p>\n
                                   :: 8 ::\n<\/p>\n
      can make an appointment. In a case where there is<\/p>\n
      agreed procedure the Chief Justice or the person or<\/p>\n
      institution designated by him has to take necessary<\/p>\n
      measures so as to secure appointment as per the<\/p>\n
      agreed procedure. In our view, endeavour must be to<\/p>\n
      give effect to that procedure and not to annihilate it.<\/p>\n
      Only in cases where that endeavour to secure the<\/p>\n
      appointment does not succeed, the Chief Justice or the<\/p>\n
      person designated would go for an independent<\/p>\n
      arbitrator.\n<\/p>\n<\/p>\n
             8. Arbitration agreement itself is a contract and<\/p>\n
      parties enter into solemn agreement agreeing on a<\/p>\n
      procedure for appointing an arbitrator. The mere fact<\/p>\n
      that a party has failed to follow that agreed procedure<\/p>\n
      does not mean that the Chief Justice or the designated<\/p>\n
      person shall not take any measure to give effect to the<\/p>\n
      agreed procedure…”\n<\/p>\n
In view of the decision of the Division Bench, I am of the view that<\/p>\n
the Court is not powerless in dealing with the matter, if no arbitrator<\/p>\n
is appointed by the Board.\n<\/p>\n<\/p>\n
      8.    The next question to be considered is whether the<\/p>\n
Arbitration Request is to be allowed at this stage when the Chairman<\/p>\n
ARB. REQUEST NO.35 OF 2009<\/p>\n
                                    :: 9 ::\n<\/p>\n
has issued notice to the applicant for a hearing of the appeal. In<\/p>\n
2005 (1) KLT 763 (National Thermal Power Corporation Ltd. v.<\/p>\n
Raghul Constructions (P) Ltd.)<\/a> referred to above, such a situation<\/p>\n
arose and the Division Bench took the view that even if an arbitrator<\/p>\n
is appointed subsequent to the filing of the Arbitration Request, such<\/p>\n
a procedure cannot be faulted. In the present case, the arbitration<\/p>\n
clause can be invoked only after the decision of the Chairman. The<\/p>\n
Chairman has not decided the appeal. There is also a clause in<\/p>\n
Annexure A9 that if the contractor fails to make any demand for<\/p>\n
appointment of an arbitrator within 120 days of receiving the<\/p>\n
intimation from the Engineer that the final bill is ready for payment,<\/p>\n
the claim of the contractor shall be deemed to have been waived and<\/p>\n
barred and the Board shall be discharged and released of all the<\/p>\n
liabilities under the contract in respect of the claims. The learned<\/p>\n
counsel for the applicant pointed out that if the Arbitration Request is<\/p>\n
now closed awaiting the decision of the Chairman, the clause<\/p>\n
referred to above would preclude him from raising his claim. But, I<\/p>\n
do not think that the respondents would be able to raise such a<\/p>\n
contention since the applicant had already raised his claim within<\/p>\n
120 days. The respondents would be estopped from raising such a<\/p>\n
contention. I hold that the applicant would not be precluded from<\/p>\n
ARB. REQUEST NO.35 OF 2009<\/p>\n
                                   :: 10 ::\n<\/p>\n
raising his claim and from contending that an Arbitrator should be<\/p>\n
appointed, in case the decision of the Chairman goes against him,<\/p>\n
since the applicant had already invoked the clause and made a<\/p>\n
request for appointing an Arbitrator.\n<\/p>\n<\/p>\n
      9. Going by the peculiar terms of Annexure A9, I think it would<\/p>\n
be ideal to relegate the question of appointment or an arbitrator or<\/p>\n
the question of taking such measures, until the Chairman takes a<\/p>\n
decision in the matter. The Chairman shall take a decision in the<\/p>\n
appeal filed by the applicant within thirty days from today, after giving<\/p>\n
an effective and meaningful opportunity of being heard to the<\/p>\n
applicant. If, for any reason, the applicant is dissatisfied with the<\/p>\n
decision of the Chairman, invoking the clause in Annexure A9, he<\/p>\n
would be entitled to invoke the arbitration clause by issuing<\/p>\n
appropriate notice.\n<\/p>\n
      The rights of both the parties are left open and the Arbitration<\/p>\n
Request is closed with the above direction.<\/p>\n
                                                    (K.T.SANKARAN)
\n                                                           Judge<\/p>\n
ahz\/<\/p>\n","protected":false},"excerpt":{"rendered":"
Kerala High Court T.J.Augusthy vs The Chairman on 20 May, 2010 IN THE HIGH COURT OF KERALA AT ERNAKULAM AR.No. 35 of 2009() 1. T.J.AUGUSTHY, S\/O.JOSEPH, … Petitioner Vs 1. THE CHAIRMAN, COCHIN PORT TRUST, … Respondent 2. CHIEF ENGINEER, For Petitioner :SRI.SAJI MATHEW For Respondent :SRI.B.S.KRISHNAN (SR.) The Hon’ble MR. Justice K.T.SANKARAN Dated :20\/05\/2010 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,21],"tags":[],"class_list":["post-14374","post","type-post","status-publish","format-standard","hentry","category-high-court","category-kerala-high-court"],"yoast_head":"\nT.J.Augusthy vs The Chairman on 20 May, 2010 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/t-j-augusthy-vs-the-chairman-on-20-may-2010\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T.J.Augusthy vs The Chairman on 20 May, 2010 - 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