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IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR
SUDESH BANSAL, J.
M/s Rakesh Enterprises, Jaipur, through Its Authorised Partner Sh. Rishabh Jain - Appellant
Vs.
Union Of India - Respondent
S.B. Arbitration Application No. 55 Of 2024
Decided On : 14-02-2025
(A) Arbitration and Conciliation Act, 1996 - Section 11(6) - Appointment of Arbitrator - Application filed for appointment of a sole Arbitrator to resolve disputes arising from a contract for installation of a lift - The applicant claimed loss due to foreclosure of the contract by the respondent - The court found that the applicant followed the procedure for arbitration as per Clause 25 of the General Conditions of Contract-2020, and the Chief Engineer failed to refer the dispute to the Dispute Redressal Committee within the stipulated time. (Paras 1, 9, 10, 13)
(B) Limitation - The court noted that the applicant raised the claim within three years from the date of accrual of the cause of action, thus adhering to the limitation period. (Paras 8, 9)
Facts of the case:
The applicant was awarded a contract for the installation of a lift but faced foreclosure due to the respondent's failure to specify the site, leading to a claim for damages. The applicant invoked arbitration after the Chief Engineer did not refer the dispute to the DRC within the stipulated time.
Findings of Court:
The court found that the applicant had followed the necessary procedure for appointing an Arbitrator and that the Chief Engineer's failure to act within the stipulated time allowed the applicant to invoke arbitration directly.
Issues: The main issues included whether the applicant adhered to the procedure for appointing an Arbitrator and the timeliness of the arbitration application.
Ratio Decidendi: The court ruled that the Chief Engineer's failure to refer the dispute to the DRC within the stipulated time allowed the applicant to invoke the arbitration clause directly, affirming the importance of adhering to contractual procedures.
Result: The arbitration application is allowed, and an Arbitrator is appointed.
Order :
SUDESH BANSAL, J.
1. Instant civil arbitration application has been filed by applicant under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (for short "the A&C Act, 1996"), seeking appointment of a sole Arbitrator to resolve the dispute arisen between the parties under the Contract No.15/EE (E)/JCED/2020-21 for "SITC of 13 passengers (884 kg) capsulated lift at Academic Block, NIA, Jaipur".
2. Reply to the arbitration application in form of counter affidavit, by and on behalf of respondent, has been filed.
3. Heard learned counsel for both the parties and perused the documents available on record.
4. Petitioner has come up with a case that the contract in respect of SITC for 13 Passengers (884 Kg) Capsulated Lift at Academic block, NIA Jaipur vide order dated 01.01.2021, was awarded in favour of applicant and pursuant thereof, the applicant undertook preparation to complete the contract but on account of not specifying the site by respondent, the work could not be initiated. Later on, the respondent vide letter dated 31.07.2021 (Ann.4) was issued a letter for foreclosure of the contract which has caused loss of profit/earnings to the applicant as also applicant suffered damages.
5. Applicant has referred Clause 25 of the General Conditions of Contract-2020 (for short "GCC-2020), to refer the dispute for resolution to the Arbitration Tribunal of sole Arbitrator stating inter alia that in terms of such clause, request was made by the applicant to the Chief Engineer to refer the dispute to the Dispute Redressal Committee (DRC) vide letter dated 28.01.2024 but the dispute was not referred to DRC within the stipulated period of 15 days, hence the applicant issued a legal notice dated 24.02.2024 pressing for appointment of an Arbitrator. On account of non- appointment of Arbitrator by mutual consent, the instant arbitration application has been filed on 18.04.2024.
6. In reply to the arbitration application, respondent has not questioned the issuance of contract work, in favour of applicant vide letter dated 01.01.2021, so also foreclosure of such contract vide letter dated 31.07.2021, however, the arbitration application has been resisted on the ground of non-adherence to the procedure for appointment of Arbitrator, envisaged under Clause 25 of the GCC-2020. The respondent has also raised an objection of limitation that the prayer for arbitration has been made belated.
7. In addition, it has been pointed out that the dispute has been referred to the DRC but in rebuttal, counsel for the applicant submits that for making reference of dispute to the DRC, belated consent of the applicant was sought but since the stipulated period of 15 days had passed, the applicant never extended his consent and has invoked the arbitration clause prior thereto vide notice dated 24.02.2024.
8. Having considered the rival contentions of learned counsel for both parties and after going through the respective pleadings and material on record, this Court finds that the dispute arose between the parties on issuance of letter dated 31.07.2021, by the respondent for foreclosure of the contract awarded in favour of the applicant vide letter dated 01.01.2021. Applicant has raised a claim for awarding compensation and damages through letter dated 28.01.2024, it means within a period of three years from the date of accrual of cause of action. It appears that the dispute was not referred by the Chief Engineer to the DRC within stipulated period of 15 days from receipt of letter dated 28.01.2024, as envisaged in Clause 25 (i) of the GCC-2020, the applicant invoked arbitration clause of Section 25 (ii) of GCC-2020 vide legal notice dated 24.02.2024 to send the dispute before the sole Arbitrator for resolution. The clause 25 of GCC-2020 reads as under:-
"Clause 25 Except where otherwise provided in the contract, all questions and disputes relating to the meaning of the specifications, design, drawings and instructions here-in before mentioned and as to th
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