An order terminating arbitral proceedings under Section 32(2)(c) of the A&C Act is not an award and can be challenged under Section 14(2) of the A&C Act. Delay in appointing an arbitrator may warrant costs to be paid to the opposing party.

JUDGMENT :

1. The petitioner – a Joint Venture constituted by Progressive Construction Limited and SUNCON Construction Berhard, Malaysia – has filed the present petition, inter alia, impugning an order dated 20.04.2020 passed by the two arbitrators terminating the arbitral proceedings under Section 32(2)(c) of the Arbitration and Conciliation Act, 1996 (hereinafter ‘the A&C Act’).

2. The present application is filed under Section 14(1)(a) read with Section 15 of the A&C Act. The petitioner further prays for substitution of the Arbitrator by an independent arbitrator appointed by this Court.

3. The arbitral proceedings were terminated because the arbitrator nominated by the petitioner had resigned and the petitioner had not taken steps to nominate another arbitrator in his place. Consequently, the arbitral proceedings could not proceed and the remaining two arbitrators constituting the Arbitral Tribunal concluded that it was impossible to continue the proceedings and, accordingly, terminated the same. The petitioner claims that there was a communication gap and the petitioner was not aware that the arbitrator appointed by it had resigned. The Arbitral Tribunal had not issued any notice to the petitioner in this regard prior to terminating the arbitral proceedings.

4. The respondent (hereinafter ‘NHAI’) contests the maintainability of the present petition as well as contends that the impugned order cannot be faulted.

5. The aforesaid controversy arises in the following context.

6. NHAI had invited bids for “Four laning and Strengthening of the Existing two lanes between Km. 317 and Km. 65 on NH-2, in State of U.P. and Bihar for construction Package IV-A: Contract Agreement No. GTRIP/5.” Pursuant to the said notice inviting tenders, the petitioner submitted its bid on 15.12.2001 and it was opened on the same day. The petitioner’s bid was accepted and by a letter dated 23.02.2002, the petitioner was awarded the contract for an amount of Rs.3,96,47,78,901/-. A formal agreement between the parties was executed on 28.03.2002. The works were divided into three sections. The first section was to be completed within a period of eighteen months from the date of commencement; the second section was to be completed within a period of twenty four months from the date of commencement; and the third section was to be completed within a period of thirty six months from the date of commencement, that is, by 30.03.2005.

7. The petitioner claims that certain disputes arose between the parties in respect of the said contract. NHAI claims that the petitioner did not complete the works within the stipulated time and therefore, was liable to pay liquidated damages. The petitioner invoked the arbitration clause. It claimed Rs.57,84,00,000/- towards overstay/overhead charges; Rs.2,50,00,000 as refund of the liquidated damages deducted by NHAI; and Rs.40,04,000/- for rehabilitation of Bridge 58/1. The petitioner also claimed waiver of liquidated damages. In addition, the petitioner also claimed interest (pre-suit pendente lite as well as future interest) as well as costs quantified at Rs.10 lacs.

8. The petitioner also filed a petition under Section 9 of the A&C Act (O.M.P. 1019/2013) seeking certain measures of interim protection. The said petition was disposed of by an order dated 09.01.2015 and the recovery of liquidated damages was stayed during the arbitral proceedings.

9. The petitioner nominated Justice E. Padmanabhan (Retd.) as its nominee arbitrator. NHAI appointed Mr. S.R. Pandey as its nominee and both the nominated arbitrators nominated Mr. B. Majumdar as the Presiding Arbitrator. With the appointment of the Presiding Arbitrator on 03.08.2015, the Arbitral Tribunal was constituted. The petitioner filed its statement of claims and NHAI also filed counter claims before the Arbitral Tribunal inter alia claiming Rs.37,15,00,000/- as loss due to short recovery of liquidated damages; Rs.60,55,04,379/- as loss of toll revenue from 20.07.2006 to 17.05.2008;