2008 Supreme(Raj) 1967
RAJASTHAN HIGH COURT
Manak Mohta, J.
Sohan Lal Pungaliya (M/s.) - Appellant
Versus
The Union of India & Ors. - Respondent
S.B. Civil Misc. Arbitration Application No. 49 of 2007.
Decided On : 6-05-2008
Advocates:
For the Applicant:S.N. Trivedi, Advocate.
For the Respondents:Dr. Pushpendra Singh Bhati, Advocate.
The main legal point established is the requirement to appoint an independent arbitrator to resolve disputes arising from a work contract, as provided under the Arbitration and Conciliation Act, 1996, Section 11(6).
Headnote:
Arbitration - Work Contract Dispute - Arbitration and Conciliation Act, 1996, Section 11(6) - [PARTNERSHIP FIRM, WORK CONTRACT DISPUTE, ARBITRATION AND CONCILIATION ACT, 1996, SECTION 11(6)] - The court discussed the provisions of the work contract, the appointment of an independent arbitrator, and the waiver of the right to proceed with the matter. The court highlighted the requirement to appoint an independent arbitrator, the dispute resolution through arbitral proceedings, and the non-sustainability of the respondent's contentions.
Fact of the Case:
The applicant, a partnership firm, was awarded a work contract by the railways. A dispute arose regarding the completion of the work, leading to the applicant's request for the appointment of an independent arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.
Finding of the Court:
The court found that a dispute existed between the parties, and the applicant's claims had not been satisfied. It concluded that an independent arbitrator was required to resolve the disputes between the parties.
Issues: The issues involved the non-completion of work, the appointment of an independent arbitrator, and the sustainability of the respondent's contentions.
Ratio Decidendi: The court held that the applicant had raised valid claims that were not satisfied, establishing the existence of a dispute. It also determined that the non-petitioner had waived their right to proceed by not referring the dispute to arbitration. The court further concluded that an independent arbitrator was required to resolve the disputes between the parties.
Final Decision: The application was allowed, and an independent arbitrator was appointed to resolve the dispute between the parties. The initial expenses were to be deposited by the applicant, and the fee and cost of arbitration would be borne equally by both parties.
JUDGMENT
1. - Heard learned counsel for the parties in respect of application filed Under section 11(6) of the Arbitration and Conciliation Act, 1996 for the appointment of Arbitrator.
2. As per the application, the applicant is a partnership firm. The railways awarded a work contract to the applicant for "'supplying and stacking of hand broken stone ballast (hard stone) in yards between the Stations Raika-Bagh (excluding) to Bhagat- Ki-Kothi and upto Km of 629.100 of Jodhpur-Marwar Junction." and an agreement No.Dy./JU/103 of 96-97 dated 13.9.1996 (Annex.1) was executed between the parties and a work-order dated 12.8.1996 was given to the applicant. As per the work order, the work was to commence from 12.8.1996 and was to be completed by 11.1.1997. It alleged by the applicant that despite passing of one month, the chart specifying the site for sending the stone ballast was not provided to him, on that, the applicant made representation dated 13.9.1996 (Annex.2) to the Railways. Later on, the site was provided by Railways but as per the applicant since the site was not appropriate (was having big holes and large trees standing thereon), therefore, the applicant kept on asking the railways for providing suitable site so that the material could be supplied but no heed was given and as the time was about to expire as there was inaction on the part of the Railways but contrary to that the railways vide its notice dated 25.1.1997 (Annex.9) rescinded the contract with immediate effect and intimated the contractor that as the contractor had failed to discharge the contractual obligations and complete the work within the stipulated time, therefore, as per terms of the contract under Clause 62 of the General Conditions of the Contract, the railway reserves the right to claim damages. Thereafter the applicant received interim order from the court and the duration of the work was increased upto 28.2.1997 and the Railways were restrained from cancelling the contract but vide letter dated 21.1.1997 the railways invited fresh tender for the execution of same work, the contract between the parties was rescinded by the railways.Thus a dispute arose between the parties. It was amicably agreed that in case of dispute of any sort, the matter will be resolve through arbitral proceedings. The contractor served legal notice dated 19.4.1997 (Annex.12) on the Department and thereby demanded his dues to the tune of Rs. 8,63,222/- with interest @ 18% per annum and also made a request to appoint arbitrator to resolve the dispute as per the Clause 64 of the Standard General Conditions of Contract but no reply was given, despite receipt of notice and lapse of reasonable time, hence, this application has been moved under Section 11(6) of the Act of 1996 before this Court for appointment of independent arbitrator.
3. A reply to the application was submitted wherein it was stated the contractor was time and again asked to speed up the work by mobilising additional resources, however, he was not in a position to execute the work due to poor resources. The applicant had not done any work even after the grant of extended time and additional period by the learned Civil Judge vide his order dated 7.1.1997, as such, the railway was forced to terminate the contract vide its letter dated 25.1.1997 and after that only fresh tenders were invited for the same work in order to complete the left-over work. It was further stated that the demand of appointment of arbitrator was beyond limitation as the applicant has filed the application after a lapse of about two years instead of filing the same within the prescribed time under Clause 64(1)(iii) of GCC-89. Further as per the railways, there is no provision to appoint an independent arbitrator in the agreement executed between the parties. The applicant has invoked the provisions of Section-11(6) of the Arbitration and Conciliation Act, 1996 prior to the decision in the matter under the provisions of Section 11(4) and 11(5).
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