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SUPREME COURT OF INDIA
RANJAN GOGOI. J.
WALTER BAU AG, LEGAL SUCCESSOR, OF THE ORIGINAL CONTRACTOR, DYCKERHOFF & WIDMANN A.G. – PETITIONER
VERSUS
MUNICIPAL CORPORATION OF GREATER MUMBAI & ANR. – RESPONDENTS
ARBITRATION CASE (CIVIL) NO.35 OF 2014
Decided On : 20-01-2015
(2000) 8 SCC 151; (2013) 4 SCC 35 – Referred
(2014) 11 SCC 560; Arbitration Case (Civil) NO.30 of 2014 – Distinguished
Facts of the case:
A works contract No.3AAA dated 20th December, 2000 was executed by and between the petitioner and the Municipal Corporation of Greater Mumbai (respondent No.1 herein) for execution of city tunnel rehabilitation works for the purposes of transporting the city's sewage. Disputes and differences having arisen between the parties under the said contract, the petitioner invoked the arbitration clause contained therein and by letter, dated 24th February, 2014, nominated one Shri R.G. Kulkarni as its Arbitrator. By the said communication, the petitioner called upon the respondent No.1 to appoint its Arbitrator within 30 days of the receipt of the aforesaid letter/notice.
The respondent Corporation having failed to respond to the notice dated 24th February, 2014 of the petitioner, an approach was made to the ICADR by the petitioner on 19th May, 2014. On the basis thereof, the ICADR by its letter dated 3rd June, 2014 called upon the respondent Corporation to make appointment of an Arbitrator from a panel of three names that was furnished to the respondent Corporation or to independently appoint an arbitrator. The respondent Corporation pursuant to the said communication of the ICADR appointed Mr. Justice (Retd.) A.D. Mane as its arbitrator by communication dated 3rd July, 2014.
Thereafter, this application/petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 was filed on 21st August, 2014.
Finding of the Court:
Appointment of arbitrator by respondent Corporation contrary to agreed procedure is non est in law.
Result: Petition disposed of.
JUDGMENT
1. A works contract No.3AAA dated 20th December, 2000 was executed by and between the petitioner and the Municipal Corporation of Greater Mumbai (respondent No.1 herein) for execution of city tunnel rehabilitation works for the purposes of transporting the city's sewage. Disputes and differences having arisen between the parties under the said contract, the petitioner invoked the arbitration clause contained therein and by letter, dated 24th February, 2014, nominated one Shri R.G. Kulkarni as its Arbitrator. By the said communication, the petitioner called upon the respondent No.1 to appoint its Arbitrator within 30 days of the receipt of the aforesaid letter/notice.
2. The arbitration clause in the agreement between the parties would require to be specifically noticed and, therefore, is being extracted herein below:
| “Modified Sub-Clause 67.3 Arbitration Sub-clause 67.3 is modified to read as follows: Any dispute, in respect of which the Recommendation(s), if any, of the Board has not become final and binding pursuant to Sub-clause 67.1, shall be finally settled by arbitration as set forth below. The Arbitral Tribunal shall have full power to open-up, review and revise any decision, opinion, instruction, determination, certificate or valuation of the Engineer and any Recommendation(s) of the Board related to the dispute: |
| I) | A dispute with and Indian contractor shall be finally settled by arbitration in accordance with the Indian Arbitration and Conciliation Act, 1996 or any statutory amendment thereof. The Arbitral Tribunal shall consist of 3 Arbitrators, one each to be appointed by the Employer and the Contractor. The third arbitrator shall be chosen by two arbitrators so appointed by the parties and shall act as Presiding Arbitrator. In case of failure of the two arbitrators, appointed by the parties to reach upon a consensus within a period of 30 days from the appointment of the arbitrator appointed subsequently, the presiding arbitrator shall be appointed by the International Centre for Alternative Dispute Resolution in India. For the purpose of this Sub-Clause, the term “Indian Contractor” means a contractor who is registered in India and is a juridical person created under Indian Law as well as a Joint Venture between such a Contractor and a Foreign Contractor. |
| II. | In case of a dispute with a foreign Contractor, the dispute shall be finally settled in accordance with the provisions of UNCITRAL Arbitration Rules. The arbitral tribunal shall consist of 3 Arbitrators one each to be appointed by the Employer and the Contractor. The third arbitrator shall be chosen by the two arbitrators so appointed by the parties, and shall act as presiding arbitrator. In case of the failure of the two arbitrators appointed by the parties to reach upon a consensus within a period of 30 days from the appointment of the arbitrator appointed subsequently, the presiding arbitrator shall be appointed by the International Centre for Alternative Dispute Resolution in India. For the purposes of this clause 67, the term “Foreign Contractor” means a contractor who is not registered in India and is non juridical person created under India Law. |
| III. | Neither party shall be limited in the proceedings before such tribunals to the evidence nor did arguments already put before the Engineer or the Board, as the case may be, for the purpose of obtaining its/his said Recommendations/ decision. No such Recommendations/decision shall disqualify the Engineer or any of the members of the Board, as the case may be, from being called as a witness and giving evidence before the arbitrators or any matter whatsoever |
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