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HIGH COURT OF JUDICATURE AT MADRAS
KRISHNAN RAMASAMY, J.
S. Krishnamoorthy, Proprietor, M/s. Sriram Engineering Company, Chennai - Appellant
Versus
M/s. Engineering Projects India Limited, Represented by its Executive Director, Chennai - Respondent
O.P. Nos. 82 to 84 of 2021
Decided On : 24-03-2023
Arbitration - Appointment of Sole Arbitrator - Arbitration and Conciliation Act, 1996 - Clause 76 of the General Conditions of Contract
Fact of the Case:
The petitioner filed a petition seeking the appointment of an independent sole arbitrator to adjudicate disputes arising from work orders and the General Conditions of Contract. The petitioner also sought to restrain the respondent from encashing an expired Bank Guarantee.
Finding of the Court:
The court found that the appointment of a sole arbitrator in terms of Clause 76 of the General Conditions of Contract was against the law laid down by the Hon'ble Apex Court in a previous case. The court appointed an arbitrator to adjudicate the disputes and restrained the respondent from encashing the Bank Guarantee until the commencement of arbitration proceedings.
Issues: The issues revolved around the appointment of a sole arbitrator and the validity of the Bank Guarantee.
Ratio Decidendi: The court held that no arbitrator can be appointed unilaterally unless the parties agree in written consent. The court also directed the petitioner to renew the Bank Guarantee and appointed an arbitrator to adjudicate the disputes.
Final Decision: The court appointed an arbitrator to adjudicate the disputes, restrained the respondent from encashing the Bank Guarantee, and disposed of the original petitions, leaving the parties to bear their own costs.
JUDGMENT
(Common Prayer: Original Petition filed under Section 11(5) of the Arbitration and Conciliation Act, 1996 to appoint an independent sole arbitrator to adjudicate the disputes arising between the petitioner and the respondent pursuant to the work order Nos.SRO/PMD/683/041 dated 06.05.2013, SRO/PMD/686/044 & SRO/PMD/686/045 both dated 19.06.2013 respectively and Clause 76 of the General Conditions of Contract for the appointment of sole Arbitrator and to direct the respondents to pay the cost of this petition.)
Common Order:
1. These petitions have been filed under Section 11(5) of Arbitration and Conciliation Act, 1996, (hereinafter referred as “the Act”), seeking to appoint an independent sole arbitrator to adjudicate the disputes arising between the petitioner and the respondent pursuant to the work order Nos.SRO/PMD/683/041 dated 06.05.2013, SRO/PMD/686/044 & SRO/PMD/686/045 both dated 19.06.2013 respectively and Clause 76 of the General Conditions of Contract for the appointment of sole Arbitrator and to direct the respondent to pay the cost of this petition.
2. Both the learned counsel appearing for the respective parties would submit that the present dispute is arising out of the work order Nos.SRO/PMD/683/041 dated 06.05.2013, SRO/PMD/686/044 & SRO/PMD/686/045 both dated 19.06.2013 respectively. They would further submit that the present dispute is arbitrable in terms of Clause 76 of the General Conditions of Contract, which reads as follows:
“76.0 ARBITRATION
76.1 Before resorting to arbitration as per the clause given below, the parties if they so agree may explore the possibility of conciliation as per the provisions of Part-Ill of the Arbitration and Conciliation Act. 1996. When such conciliation has failed, the parties shall adopt the following procedure for arbitration:
i) Except where otherwise provided for in the contract, any disputes and differences relating to the meaning of the Specifications, Design, Drawings and Instructions herein before mentioned and as to the quality of workmanship or materials used in the work or as to any other question, claim, right, matter or thing whatsoever in any way arising out of or relating to the Contract, Designs, Drawings, Specifications, Estimates, Instructions, or these conditions, or otherwise concerning the works or the execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the Sole Arbitration of the Chairman and Managing Director (CMD) of Engineering Projects (India) Limited (EPI), or any other person discharging the functions of CMD of EPI and if CMD or such person discharging the functions of CMD of EPI is unable to act, to the sole Arbitration of some other person appointed by CMD of EPI or such other person discharging the functions of CMD of EPI. There will be no objection if the arbitrator so appointed is an employee of Engineering Projects (1).Ltd. waver, such an employee shall not have directly dealt with the said Contract or the works there under on behalf of EPI. Such Arbitrator shall be appointed within 30 days of the receipt of letter of invocation of arbitration duly satisfying the requirements of this clause.
(ii) If the arbitrator so appointed resigns or is unable or unwilling to act to in reason whatsoever, or dies, the Chairman & Managing Director area his absence the person discharging the dies of the CMD of EPI may appoint now arbitrator in accordance will these terms and condone of the contract to act in his place and the new arbitrator so appointed may proceed from the stage at which it was left by his predecessor.
iii) It is a term of the contract that the party invoking the arbitrator she specify the dispute/differences or questions to be referred to the Arbitrator under this cause together with the amounts claimed in respect of each dispute.
iv) The Arbitrator may
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