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2020 Supreme(All) 773
IN THE HIGH COURT OF ALLAHABAD
Rohit Ranjan Agarwal, J.
M/s Vidhyawati Construction Co. Builders and Govt. Contractors – Applicant
Versus
Allahabad Development Authority – Opposite Party.
Arbitration And Concili. Appl.U/s 11(4) No. - 100 of 2019
Decided On : 04-11-2020
Advocate Appeared:
For the Applicant : Suresh Kumar Maurya, Ashish Kumar
For the Opposite Party : Devi Prasad Mishra, Arun Kumar
Point of Law: Section 3 of the first schedule to the old Act provides the time limit of four months within which the Arbitrator after entering on the reference has to make the award. As it is evident that after the review petition was rejected, the applicant had approached the Arbitrator on 18.9.2008 but arbitral proceedings did not commence nor any effort was made to get the mandate terminated. The argument raised by learned counsel for the respondent that proceedings shall continue according to the old Act cannot be accepted as Clause 46 clearly provides that Arbitration Act, 1940 or the statutory amendment made therein shall be applicable between the parties in case of dispute.
Headnote:
Arbitration and Conciliation Act, 1996 – Sections 11, 28, 3 – Appointment of an independent Arbitrator – Application under Section 11(4) and 11(6) of Arbitration and Conciliation Act, 1996 has been filed for appointment of an independent Arbitrator, preferably a retired Judge of this Court. –
Finding of the Court:
Section 3 of the first schedule to the old Act provides the time limit of four months within which the Arbitrator after entering on the reference has to make the award. As it is evident that after the review petition was rejected, the applicant had approached the Arbitrator on 18.9.2008 but arbitral proceedings did not commence nor any effort was made to get the mandate terminated. – The argument raised by learned counsel for the respondent that proceedings shall continue according to the old Act cannot be accepted as Clause 46 clearly provides that Arbitration Act, 1940 or the statutory amendment made therein shall be applicable between the parties in case of dispute. – The dispute, which started in the year 1995 was carried after the amendment in 1996 and the proceedings were decided as per the new Act. – Further saving clause 85(2)(a) also provides that the new Act shall apply to arbitral proceedings which had commenced before this Court unless otherwise agreed by the parties. – However, in the present case the parties had already agreed to submit as per the amended provisions of 1940 Act, meaning thereby that the new Act is applicable in the present dispute. – Court have carefully considered the rival submission of the parties and the material on record and find that the application, which has been ostensibly moved under Section 11 of the Act, 1996 for appointment of Arbitrator invoking arbitration clause in the year 2019 does not warrant any interference of this Court as the applicant had completely failed to disclose that earlier arbitral proceedings in regard to the dispute which was initiated in the year 1996 had not come to an end, neither any prayer has been made for terminating the mandate of the Arbitrator nor any prayer has been made for the substitution of Arbitrator and simplicitor the application under Section 11 has been moved invoking the arbitration clause 46.
Result: – Application Dismissed
JUDGMENT :
1. Heard Sri Ashish Kumar, learned counsel for the applicant and Sri Arun Kumar, learned counsel for the respondent-Development Authority.
2. This application under Section 11(4) and 11(6) of Arbitration and Conciliation Act, 1996 (hereinafter referred to as “Act, 1996”) has been filed for appointment of an independent Arbitrator, preferably a retired Judge of this Court.
3. Facts, in nutshell, are that on 26.02.1985, Allahabad Development Authority (Now known as Prayagraj Development Authority, for short “Authority”) framed a project for construction of Multi-Storey Complex at Clock Tower, Chowk then Allahabad (now Prayagraj). Tender, inviting for construction of Commercial Complex, was issued on the said date. Cost of project was quantified approximately at Rs.57 lakhs. Applicant-Company being the lowest bidder, the bid was accepted on 19.03.1985 and an agreement was entered between the parties on 04.04.1985 for construction of two-storey Commercial Complex, to be completed within six months from the date of commencement. However, at a later date, the said project was changed to four-storey Complex along with one Powerhouse building and the cost was also varied. The contract contains arbitration clause no.46 providing for adjudication of dispute by Arbitrator as per the provisions of Arbitration Act, 1940 (old Act) as well as any statutory modifications thereafter. As per the terms of the agreement, construction was not completed within six months as such period was extended and it was completed on 31.8.1987. The applicant-Company was paid about Rs.1,14,00,000/-out of twelve running bills for amount of Rs.1,14,43,922.01. However final bill was submitted by applicant on 09.12.1989 before the Authority. According to the applicant, as the bill was not cleared by the authority, a Writ Petition No.9086 of 1993 was filed before this Court seeking a writ of mandamus commanding the respondent-Authority to release the final amount of bill. This Court on 21.01.1994 disposed of the writ petition directing the Vice-Chairman of the Authority to decide the claim of applicant-Company within a period of one month from the date on which certified copy of the order is produced before him. On 17.06.1994 the Vice Chairman of the respondent-Authority rejected the claim of the applicant-Company. The applicant-Company on 11.02.1995 sent a letter to the Vice-Chairman of the respondent Authority appointing one Sri R.C.Jain, fellow of Indian Institute of Architect, as an Arbitrator invoking the arbitration clause and requested the Authority to appoint another Arbitrator in terms of the Clause 46, and in case the Authority fails to appoint Arbitrator within 15 days, the Arbitrator appointed by the applicant shall adjudicate the dispute between the parties as sole Arbitrator. On 06.02.1995, the Vice Chairman of the Authority informed the applicant that the matter had already been decided and the claim of the applicant has been rejected on 17.06.1994, thus question of appointing Arbitrator does not arise.
4. The applicant Company on 07.02.1996 submitted 18 claims before the Arbitrator, who issued notice to the Authority on 14.04.1996, but the Authority neither appeared before the Arbitrator nor filed the reply. Various dates were fixed by the sole Arbitrator Sri R.C.Jain as 14.02.1997, 12.4.1997, 23.4.1997 and 24.4.1997 for hearing the matter. The sole Arbitrator could not give the award within the statutory period, as such an application was filed for extension of time before the Court under Section 28 of the Arbitration Act, 1940 (old Act). The Court extended the period with the condition that award be given by 3rd June, 1997. Arbitrator thereafter fixed 19.05.1997 for hearing and award was delivered on 23.05.1997 for a sum of Rs.1,17,91,714/-as principal and interest on Rs.88,12,763/- at the rate of 18% from the date of award till decree or payment whichever is earlier.
5. The said award was submitted before Civil Judge (Senior Division) Al
