Non-functionality of the standing committee for settlement of disputes led to the appointment of an arbitrator to resolve the construction contract dispute.

1. - This application for appointment of an arbitrator is preferred by the applicant partnership firm, a contractor of "AA" class. The partnership firm was having work order for construction of EWS 128 multistory G+3 houses in Sector-9, Kudi Bhagtasani Housing Board, Jodhpur and the agreement in this regard was executed on 20.4.2011 bearing numbers 2/2011-12. The estimated cost of the work assessed under the work order was Rs. 4,18,95,981.61. The work assigned was to be commenced from 19.4.2011 with a condition to complete the same on or before 28.7.2012.

2. Respondent Rajasthan Housing Board supplied lay out plan to the applicant but before commencement of the work the Deputy Commissioner (Housing) of the Rajasthan Housing Board by letter dated 25.4.2011 directed not to proceed with the work order. The retainment so made was revoked on 17.3.2012. The allegation of the applicant that despite the order of retainment the work plan was not rescheduled and that caused delay in completion of the project.

3. According to the applicant the respondent unilaterally invoked clauses 2 and 3 of the agreement on 6.6.2013 to get the work done by some other contractor at the risk and cost of the applicant. Looking to the action of the respondent Housing Board the applicant by a notice dated 9.6.2013 made a demand for appointment of an independent arbitrator. The notice dated 9.6.2013 was responded by the Housing Board through its counsel with a stand that if the applicant wants to take resort to arbitration clause, that may be taken as per clause 23 of the agreement by depositing non-refundable prescribed fee.

4. In the instant application the submission of the applicant that as a matter of fact clause 23 of the agreement is absolutely non-workable in view of the fact that the members therein are officers of the Government of Rajasthan and those are having no concern with the Rajasthan Housing Board. It is further submitted that as a matter of fact the clause 23 in the instant agreement has been copied from the model agreement of the Government of Rajasthan and that is absolutely non-functional so far as the Rajasthan Housing Board is concerned.

5. Shri Laxman Lal Guru, Resident Engineer, Rajasthan Housing Board, Division-II, Jodhpur, while meeting with the argument advanced by the applicant, states that the applicant is required to undertake the process as given under clause 23 of the agreement.

6. The clause 23 referred above reads as under:-

"23. Standing Committee for Settlement of disputes:

If any question, difference of objection, whatsoever shall arise in any way, in connection with of arising out of this instrument of the meaning of operation of any part thereof, of the right duties or liabilities of either part then, save in so far, as the decision of any such matter, as herein before provided has been otherwise provided for and whether it has been finally decided accordingly, or whether the contract should be terminated, or has been rightly terminated and as regards the rights or obligations of the parties as the result of such termination, shall be referred for decision to the empowered Standing Committee, which would consist of the followings.

(i) Administrative Secretary concerned,

(ii) Finance Secretary or his nominee, not below the rank of Deputy Secretary and/or Chief Accounts officers,

(iii) Law Secretary or his nominee, not below the rank of joint Legal Remembrancer,

(iv) Chief Engineer-cum-Addl. Secretary of the concerned department,

(v) Chief Engineer concerned (Member-Secretary)

The Engineer-in- charge on receipt of application along with non refundable prescribed fee, (the fee would be two percent of the amount in dispute, not exceeding Rs. One lac) from the contractor shall refer the disputes to the committee within a period of one month from date of receipt of application.

Procedure and Application for referring cases for settlement by the Standing Committee shall be as given in Form RPWA 90.

7. From perusal of clause 23 af