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IN THE HIGH COURT OF DELHI
Suresh Kumar Kait, J.
Ktech Engineer Builders Co. Private Limited - Appellant
Versus
Union of India - Respondent
Arb.P. 54 of 2022, Arb.P. 56 of 2022
Decided On : 07-02-2022




A party cannot unilaterally appoint an Arbitrator as it undermines unbiased dispute resolution; a collective agreement for a sole Arbitrator is essential.

Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 11(5) and 11(6) - Appointment of Arbitrator sought for resolution of disputes arising out of two construction contracts. - Disputes are arbitrable under Clause-60 of General Conditions of Contract (GCC). - Respondent conceded to appoint a sole Arbitrator for efficient dispute resolution. - Court mandates a retired judge as Arbitrator, adhering to Supreme Court's precedent prohibiting unilateral Arbitrator appointment. (Paras 1, 8, 9, 10).

(B) Legal Principles - The principle that no single party can unilaterally appoint an Arbitrator to ensure unbiased dispute resolution was affirmed. (Para 9).

(C)

Facts of the case:
Appellant entered two separate contracts for construction, completed works on specified dates, and subsequently issued notices to invoke arbitration due to delays in final bill payments.

(D)

Findings of Court:
The joint agreement of counsel for a sole Arbitrator is accepted, appointing a retired judge to adjudicate the disputes. (E)

Issues: The court addressed the legitimacy of invoking arbitration and the necessity of appointing a single Arbitrator for disputes from multiple contracts. (F)

Ratio Decidendi: Emphasizing on the unbiased nature of arbitration, the court held that unilateral appointment is impermissible, advocating for a solution that favors collective agreement. (G)

Result: Petitions are allowed, and a sole Arbitrator is appointed.

JUDGMENT (Oral)

1. The above captioned two petitions have been filed by the petitioner under Section 11 (5) & (6) of the Arbitration and Conciliation Act, 1996 seeking appointment of Arbitrator for adjudication of disputes with respondent.

2. Since the parties to the present petition are similar, therefore, with the consent of learned counsel for the parties, these petitions have been heard together and are being disposed of by this common judgment.

3. According to petitioner, for Completion of Balance Works for Construction of Dwelling Units including Allied Services for Officers and ORs at Commissiariate Road II Line and Salt Lake (Kolkata), tenders were invited by respondent and after completion of process, petitioner had entered into two Contracts, one bearing CA No. DGMAP/PH-II/PKG-19/l(A) (R&C)/02 of 2014-2015 i.e. the Salt Lake Construction Contract (henceforth referred to as the "first contract") and second, bearing CA No.: DG MAP/PH-II/PKG-19/1 (B)(R&C)/03 of 2014-2015 i.e. Dakshineshwar Construction Contract (henceforth referred to "second contract"). The first contract in question is the subject matter of first captioned petition (ARB.P. 54/2022) and the second contract is the subject matter of second captioned petition (ARB.P. 56/2022).

4. Petitioner claims that the work under the first contract was completed on 15.03.2018 and for the second contract got completed on 30.04.2018. Also, the defect liability period of two years, as stipulated in the contracts, expired on 14.03.2020 and 29.04.2020 for the first and second contract respectively. Under these contracts, petitioner was required to raise the final bill within three months of completion of the work, however, on account of finalization of deviation order by the respondent and certain lapse on the part of Project Manager, the same could not be raised in time.

5. It is claimed by petitioner that vide letter dated 13.11.2018, petitioner submitted the bills for both the contracts and respondent was under the obligation to clear the final bill within six months from the receipt of the same in terms of Clause-56 of the GCC i.e. by 30.04.2019, however, respondent neither cleared the final bill nor provided any concrete reason for delay in doing so. Therefore, petitioner vide notices dated 27.03.2021 and 03.05.2021 invoked arbitration in terms of Clause-60 of the GCC. Since, no reply to these notices was sent by the petitioner, thus, these petitions have been filed.

6. During the course of hearing, learned counsel for petitioner has submitted that the disputes between the parties have to be resolved through arbitration in term of Clause-60 of the GCC, however, in view of Hon'ble Supreme Court's decision in Perkins Eastman Architects DPC & Anr. Vs. HSCC (India) Ltd., 2019 SCC Online SC 1517. it cannot be done and so, this Court may appoint an Arbitrator. Learned counsel further submits that though these petitions relate to different work orders between the same parties, however, for recovery of final bills, common communications and letters have been exchanged and, therefore, sole Arbitrator be appointed to adjudicate the disputes.

7. Mr. Ruchir Mishra, learned counsel appearing on behalf of respondent has disputed the claims raised in these petitions, however, has fairly conceded that the disputes are arbitrable. Learned counsel has also consented to the proposal of learned counsel for petitioner that sole Arbitrator be appointed by this Court to adjudicate the disputes arising in these petitions, as it would save time and money of the parties. However, learned counsel submits that he has instructions from the department/UOI to pray this Court that only retired Supreme Court/High Court Judge be appointed as Arbitrator.

8. Pertinently, execution of two afore-noted Contracts between the parties is not disputed. It is also not disputed that in terms of Clause-60 of GCC, differences, if any, between the parties are to be resolved through arbitration. The

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