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2016 Supreme(Online)(KER) 23661
HIGH COURT OF KERALA
SHAJI P.CHALY, J
SILPPI REALTORS AND CONTRACTORS [P] LTD – Appellant
Versus
THE CHIEF ENGINEER – Respondent
AR 90 2016
SRI.RAJIV ABRAHAM GEORGE, SRI.EAPEN ABRAHAM GEORGE, SRI.DINESH R.SHENOY, CGC
The court reinforced that it has the power to appoint an arbitrator when a party fails to adhere to the terms of an arbitration agreement.
Headnote:
Arbitration - Dispute Resolution - Condition No.70 of General Conditions of Contract - The court appointed an arbitrator as there were serious disputes existing between the parties, emphasizing the obligations under the arbitration clause.
Fact of the Case:
The applicant submitted a competitive tender for construction work for the respondents, but faced delays due to adverse weather and material procurement issues. Eventually, the contract was canceled by the respondents alleging slow progress, leading the applicant to seek arbitration.
Finding of the Court:
The court found that a legitimate dispute existed and the respondents failed to comply with the arbitration agreement by not appointing an arbitrator despite being notified. The court emphasized that legal and technical issues should be resolved by arbitration.
Issues: Whether the disputes between the parties are arbitrable and if the court should appoint an arbitrator due to the respondents' failure to act.
Ratio Decidendi: The court concluded that it has the authority to appoint an arbitrator under Section 11(6) of the Arbitration and Conciliation Act when there is a failure by the designated authority to do so.
Final Decision: The court appointed an arbitrator and dismissed the writ petition, allowing parties to raise claims in arbitration.
O R D E R
Captioned arbitration request and writ petition are filed by one and the same party. They are materially connected and therefore I heard them together, and propose to pass a common order.
A.R.No.90 of 2016
2. In response to a notice inviting tenders dated
14.07.2011 for the work of “Provision of Deficient Type II Married Accommodation for Civilian Defence Employees at Kochi” as amended vide letters dated 02.08.2011, 04.08.2011 and 17.08.2011, applicant submitted its competitive tender, which after negotiations was accepted by the 1st respondent vide Letter of Acceptance dated 31.03.2012, for a total cost of Rs.17,25,33,265.87/-. Thereafter, a formal written agreement was entered into bearing No.CE (NW)/KOCHI/61 OF 2011-12. The work was to be completed in two phases, Phase I to be completed within twelve months consisting of Sample Quarter, and Phase-II being all remaining works other than that A.R.No.90/2016 & W.P.(C) No.33948/16 2 covered under Phase-I, within 28 months. The site was handed over on 03.05.2012, Phase-I was to be completed by 02.05.2013, and Phase-II by 02.09.2014, as evident from MES Contractor's Order Sheet dated 26.04.2012, issued by the Garrison Engineer of the respondent to the applicant among others.
3. According to the applicant, the site was handed over just before the commencement of the south-west monsoon of 2012, thus limiting the work that could be carried out at site during such period, especially considering the fact that tenders had been invited as early as in July, 2011. The work under the contract envisaged construction of an RCC framed structure in 15 stories, consisting of stilts plus 14 upper floors for 58 Type II Quarters including lift wells, Machine Room, RCC Water Tanks etc., construction of a block of buildings in double storey for Sub-station, Pump House over semi underground sump and Static Water Tank, construction of an open well of 5 m. dia and
3 m. depth with RCC walls etc.
4. Consequent to the handing over of the site, applicant had under cover of three letters dated 19.05.2012 submitted 20mm graded stone aggregate, crushed metal sand A.R.No.90/2016 & W.P.(C) No.33948/16 3 as fine aggregate, concrete admixture Fosroc-Conplast - P211, and PPC cement 43 grade of Coromandel brand of India Cements Ltd., for necessary tests and approval and also sought approval for procurement of reinforcement steel and cement from RINL, SAIL and India Cements respectively. The applicant had also satisfied necessary parameters as stipulated under the agreement. Even though the samples of the said materials were submitted as early as on 19.05.2012, the same were forwarded by the Assistant Garrison Engineer under cover of letter dated 15.06.2012 after which the Zonal Lab submitted the sieve analysis of coarse and fine aggregates vide his report dated 02.07.2012. According to the applicant, applicant has complied with the stipulations contained under the agreement, however the authorities have found fault with the applicant. So also, it is stated, the site for the work under the contract being situated in a low lying area, the same was fully water logged due to the heavy rains which had commenced from June, 2012, rendering it impossible for the applicant to even ply any vehicles in the area to transport equipments, machinery and materials. In spite of all these intervening adverse circumstances, applicant cleared the site of all A.R.No.90/2016 & W.P.(C) No.33948/16 4 vegetation and other obstructions and had completed construction of Site Office and Labour Shed in the interregnum.
5. After the rains subsided in September, 2012, applicant applied for electricity connection in order to operate its machinery and equipments, and took necessary steps to record the levels of the entire project area. That apart, it is stated, in spite of being aware of the adverse circumstances, the Director (Contracts) by letter dated 04.10.2012 sent, on 1st respondent's behalf stated that it was not proceeding with the work
