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ALLAHABAD HIGH COURT
Narayan Shukla, J.
Union of India & Ors. -Appellant
Versus
Jain Construction Company and Ors. -Respondent
W. P. No. 4536 (M/S) of 2008
Decided On : 15-04-2010
Arbitration - Jurisdiction of Civil Court - Arbitration and Conciliation Act, 1996 - Section 11(6)
Fact of the Case:
The petitioners challenged the appointment of a sole arbitrator by the Civil Judge, arguing that the case fell under the Arbitration and Conciliation Act, 1996, and only the Chief Justice of the High Court had the power to appoint an arbitrator.
Finding of the Court:
The court found that the case was indeed covered under the Arbitration and Conciliation Act, 1996, and that the order passed by the Civil Judge was without jurisdiction. The court quashed the order and directed the opposite party to move the necessary application before the Chief Justice of the Court for the appointment of an arbitrator under Section 11(6) of the Act.
Issues: Jurisdiction of Civil Court to appoint arbitrator under the Arbitration and Conciliation Act, 1996
Ratio Decidendi: The court held that the case fell under the Arbitration and Conciliation Act, 1996, and the order passed by the Civil Judge was without jurisdiction. It directed the opposite party to seek the appointment of an arbitrator before the Chief Justice of the Court under Section 11(6) of the Act.
Final Decision: The writ petition was allowed, and the order appointing the sole arbitrator by the Civil Judge was quashed.
1. Heard Mr. Brijesh Kumar Shukla, learned counsel for the petitioners and Mr. U. K. Srivastava, learned counsel for opposite party no.1.
2. The petitioners have challenged the order dated 18.07.08 passed by Civil Judge (Senior Division), Unnao in Regular Suit No. 558 of 2007, whereby in place two arbitrators namely Mr. S. Chatarjee, Deputy Chief Mechanical Engineer(P)/Head Quarter, Northern Railway Baroda House, New Delhi and Mr. Adiya Joshi, Deputy Chief Accounts Officer (Cash and Pay, Railway,Cash Offic, New Delhi one Mr. R.G. Singh, Chief Engineer/Works Northern Railway, Baroda House, New Delhi has been appointed as sole Arbitrator.
3. The petitioners have raised finger upon the jurisdiction of Civil Court to pass the order impugned on the ground that the case in hand is governed under Arbitration and Conciliation Act, 1996, in which only Chief Justice of the High Court is empowered to appoint Arbitrator in the event of parties failed to reach an agreement.
4. The factual matrix of the case is that contract for the work-zone II earth work in embankment, constructions of minor bridges, Rail level platform at railway station and cabins at station etc. was awarded by the petitioners to opposite party no.1 stipulating conditions that work shall be completed within 18 months from the date of issuance of acceptance letter. The agreement was executed on 27.01.1989 for the cost of work i.e. Rs. 78,48,240/-. Since the opposite party no. 1 could not complete the work within stipulated period a notice under clause 62 of General Condition of Contract, 1971 was issued to him with request to complete the work within stipulate period but he failed to follow the same, therefore, another notice was issued on 03.07.1989 even then the opposite party no. 1 could not follow the terms of contract. Therefore, a review committee was appointed, before whom opposite party no.1 explained that due to inter se dispute of partnership of firm, he could not follow the terms of agreement, but it was hope that the same would likely to be resolved and the work would be accelerated with effect from 01.08.1989, but the same was not appreciated by the review committee and it submitted a report to the Chief Engineer, Construction Headquarters to terminate the contract and invite a fresh tender for timely completion of work. The opposite party no. 1 again failed to follow the terms of agreement as well as undertaking, ultimately the contract was terminated by means of letter dated 17.08.1989 and the opposite party no. 1 was informed that the work done would be measured on 04.09.1989. He was requested to remain present to watch the measurement at the site, but he did not turn up. The measurement was done and the work was found to have been done at the cost of Rs. 24.20 Lacs.
5. Since opposite party no. 1 was not satisfied with the action of petitioners, he by means of letter dated 15.11.1993 invoked clause 64 of General Condition of Contract, 1971 and called upon the petitioners to consider the claims as tabulated by him within a period of 90 days and make payments thereof or in the alternative, if it was not feasible to make the payments then referred the matter to the Arbitration. He raised claims for Rs. 4,98,728/-. The Petitioners by means of letter dated 3.06.1994 intimated him that firm's suit regarding rendition of account as well as dissolution of partnership is pending in the court and the demanding authority was not empowered to demand arbitration for and on behalf of the firm, therefore, request for arbitration was not legally in order and cannot be entertained unless a compromise between the partners of the firm is arrived at or judgment is delivered by the Hon'ble Court. Thereafter opposite party no. 1 by means of letter dated 05.05.2006 informed the petitioners that compromise between the partners of firm have been arrived at through Hon'ble Delhi High Court, now the claimants invoked again clause 64 of General Condition of Contra
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