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2011 Supreme(P&H) 1094
2011 (3) RCR(Civ) 171
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
HEMANT GUPTA, J.
Vinod Kumar Angi - Petitioner
Versus
Punjab Water Supply & Sewerage Board and others - Respondents
Arb. Case No.123 of 2009
Decided on: 28.04.2011
Mr. P.S. Rana, Advocate, for the petitioner.
Mr. Vijay Kaushal, Advocate, for the respondents.
In exceptional circumstances, the choice of arbitrator can go beyond the designated persons or institutions, and due regard should be given to the terms of the agreement while appointing an arbitrator.
Headnote:
Arbitration - Dispute Resolution - The court appointed an arbitrator to adjudicate upon the disputes between the parties, considering the exceptional circumstances and the failure of the authorities to appoint an arbitrator within a reasonable time. The court emphasized that due regard should be given to the terms of the agreement while appointing an arbitrator, but in exceptional cases, the choice can go beyond the designated persons or institutions.
Fact of the Case:
The petitioner submitted a tender for construction work, which was accepted, but disputes arose between the parties. The petitioner was debarred from tendering for two years, and the earnest money was forfeited. The petitioner filed a writ petition challenging these actions and subsequently approached the court for appointment of an arbitrator.
Finding of the Court:
The court found that the Superintending Engineer named as the arbitrator in the arbitration clause was not suitable to adjudicate the disputes due to the petitioner's debarment and the change in personnel. The court referred to a judgment of the Hon’ble Supreme Court and emphasized that in exceptional circumstances, an arbitrator can be appointed beyond the designated persons or institutions.
Issues: The issues revolved around the suitability of the named arbitrator, the debarment of the petitioner, and the failure of the authorities to appoint an arbitrator within a reasonable time.
Ratio Decidendi: The court held that due regard should be given to the terms of the agreement while appointing an arbitrator, but in exceptional cases, the choice can go beyond the designated persons or institutions. The court also emphasized that in the event of failure by the authorities to appoint arbitrators within a reasonable time, mandamus can be issued by the courts to appoint arbitrators.
Final Decision: An arbitrator was appointed by the court to adjudicate upon the disputes between the parties, considering the exceptional circumstances and the failure of the authorities to appoint an arbitrator within a reasonable time.
HEMANT GUPTA, J. -The present is a petition for appointment of an Arbitrator in respect of the disputes between the parties arising out of the work allotted to the petitioner vide letter dated 14.11.2008.
2. The petitioner submitted tender on 22.08.2008 for the construction of Dozer-cum-Tonner Room CMT, CCT, Supply and Fabrication and erection of Aluminum gate and 3 tone Hoist for chlorination 48 MLD, UASB, STP, treatment plant at Jamalpur, Ludhiana. After negotiations, the tender of the petitioner was accepted vide communication dated 14.11.2008. Thereafter, the disputes arose between the parties and vide communication dated 06.01.2009 (Annexure P-8), the earnest money deposited by the petitioner to the tune of Rs.63,800/-was forfeited and vide communication dated 02.03.2009 (Annexure P-9) the petitioner has been debarred for tendering for two years vide an order passed by on or behalf of the Managing Director of the Board. Thereafter, the petitioner has filed a writ petition challenging the action of the respondent for forfeiting the earnest money and debarring the petitioner from tendering. The said writ petition was disposed of on 27.07.2009 relegating the petitioner to avail alternative remedy i.e. of arbitration in terms of objection raised by the respondents. It is, thereafter, the petitioner has approached this Court for appointment of an Arbitrator.
3. It is contended on behalf of the petitioner that in terms of Arbitration Clause between the parties, the Superintending Engineer is the named Arbitrator, but since the petitioner has been debarred from further tendering for a period of two years on the recommendations of the Superintending Engineer by an order passed by the Managing Director, the Arbitrator agreed by the petitioner under the terms of the contract is not suitable person to take cognizance of the disputes and decide the same. It is further argued that even the Superintending Engineer has not taken cognizance of the disputes even though the petitioner has disputed the action initiated by the Managing Director of the Board till today.
4. On the other hand, learned counsel for the respondents has pointed out that the Superintending Engineer, on whose recommendations, the petitioner was debarred, is not the Superintending Engineer, who is presently holding the charge nor the Managing Director, who has passed the order, is the present Managing Director. Therefore, the present incumbent to the post of Superintending Engineer of the Board is competent to decide the disputes. Reliance is placed upon a judgment of Hon’ble Supreme Court in Ace Pipeline Contracts Pvt. Ltd. Vs. Bharat Petroleum Corporation Limited AIR 2007 SC 1764. The said judgment is not helpful to the arguments raised by learned counsel for the respondents. It has been held that in exceptional circumstances for reasons to be recorded, the Court can appoint an arbitrator than named arbitrator. It held to the following effect:
“20. It may also not be out of place to mention that we are aware of the departmental lethargy in making appointment of arbitrators in terms of the arbitration clause. Therefore, mandamus can be issued by the courts in exercise of powers under Section 11(6) of the Act but the demand should be in the event of failure by the authorities to appoint arbitrators within the reasonable time. Courts are not powerless to issue mandamus to the authorities to appoint arbitrators as far as possible as per the arbitration clause. But in large number of cases if it is found that it would not be conducive in the interest of parties or for any other reasons to be recorded in writing, choice can go beyond the designated persons or institutions in appropriate cases. But it should normally be adhered to the terms of arbitration clause and appoint the arbitrator/arbitrators named therein except in exceptional cases for reasons to be recorded or where both parties agree for common name.”
Section 11 (8) of the Arbitration and Conciliation
