Judgment:
Anil Kumar, J.
1. This order shall dispose of petitioner's petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator in respect of disputes which have arisen with the respondent..
2. The petitioner contended that he is a proprietor of the firm M/s. Purna Nand and he was awarded a work by the Executive Engineer Br. IV by work order No.EE (BR-IV)/TC/2001-2002/504 dated 7th January, 2002 to construct Chest Clinic and Health Centre cum Maternity Centre at Sector VII, Rohini on payment of agreed contractual amount of Rs. 1,44,18,107/-.
3. An agreement was executed between the parties which contained Clause 25 having an arbitration agreement. The arbitration agreement in Clause 25 between the parties is as under:-
Clause 25
Settlement of Disputes and Arbitration
Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specification, design, drawings and instructions here-in-before mentioned and as to the quality of workmanship or materials as used on the work or as to any other question, claim, right, matter or thing whatsoever in any way arising out of relating to the contract, designs, drawings, specifications, estimates, instructions, orders or these condition or otherwise concerning the works or the execution of failure to except the same whether arising during the progress of the work or after the cancellation, termination, completion or abandonment thereof shall be deal with as mentioned hereinafter:
(i) If the contractor consider any work demanded of him to be outside the requirements of the contract, or disputes any drawings, record or decision given in writing by the Engineer-in charge on any matter in connection with or arising out of the contract of carrying out of the work, to be unacceptable, he shall promptly within 15 days request the Superintending Engineer in writing for written instruction or decision. Thereupon, the Superintending Engineer shall give his written instructions or decision within a period of one month from the receipt of the contractor's letter.
If the Superintending Engineer fails to give his instructions or decision in writing within the aforesaid period or if the contractor may, within 15 days of the receipt of Superintending Engineer's decision, appeal to the Chief Engineer who shall afford an opportunity to the contractor to be head, if the latter so desires, and to offer evidence in support of his appeal. The chief Engineer shall give his decision within 30 days of receipt of contractors appeal. If the contractor is dissatisfied with this decision, the contractor shall within a period of 30 days from the receipt of the decision, give notice to the Commissioner M.C.D. for appointment of arbitrator failing which the said decision shall be final binding and conclusive and not referable to adjudication by the arbitrator.
(ii) Except where the decision has become final, binding and conclusive in terms of Sub Para (I) above disputes or difference shall be referred for adjudication through arbitration a sole arbitrator appointed by the Commissioner M.C.D. If the arbitrator so appointed is unable or unwilling to act or resigns his appointment or vacates his office due to any reason whatsoever another sole arbitrator shall be appointed in the manner aforesaid. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor.
4. It is a term of this contract that the party invoking arbitration shall give a list of disputes with amounts claimed in respect of each such dispute along with the notice for appointment of arbitrator and giving reference to the rejection by the Chief Engineer of the appeal.
5. It is also a term of this contract that no person other than a person appointed by such Commissioner M.C.D. as aforesaid should act as arbitrator and if for any reason that is not possible, the matter shall not be referred to arbitration at all.
6. It is also a term of this contract that if the contractor does not make any demand for appointment of arbitrator in respect of any claims in writing as aforesaid within 120 days of receiving the intimation from the Engineer-in- Charge that the final bill is ready for payment, the claim of the contractor shall be deemed to have been waived and absolutely barred and the M.C.D. shall be discharged and released of all liabilities under the contract in respect of these claims.
7. The arbitration shall be conducted in accordance with the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) or any statutory modifications or re-enactment thereof and the rules made there under and for the time being in force shall apply to the arbitration proceeding under this clause.
8. If is also a term of this contract that the arbitrator shall adjudicate on only such disputes as are referred to him by the appointing authority and give separate award against each dispute and claim referred to him and in all cases where the total amount of the claims by any party exceeds Rs. 1,00,000/- the arbitrator shall give reason for the award.
9. It is also a term of the contract that if any fees are payable to the arbitrator these shall be paid equally by the both parties.
10. It is also a term of the contract that the arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties calling them to submit their statement of claims and counter statement of claims. The venue of the arbitration shall be such place as may be fixed by the arbitrator in his sole discretion. The fees, if any, of the arbitrator shall, if required to be paid before the award is made and published, be paid half and half by each of the parties. The cost of reference and of the award (including the fees, if any, of the arbitrator) shall be in the discretion of the arbitrator who may direct to any by whom and in what manner. Such costs or any part thereof shall be paid and fix or settle the amount of costs to be so paid.
11. The petitioner asserted that in terms of agreement he started work on 16th January, 2002 and completed it on or before 15th January, 2003. The completed building had been handed over by the petitioner to the respondent on 20th September, 2003.
12. The petitioner pleaded that he had sent a letter to the Executive Engineer Br. IV on 3rd April, 1994 asking him to release the payment and also made a representation dated 1st December, 2004 to the Superintending Engineer and representation dated 12th January, 2005 to the Chief Engineer-IV reiterating his claims and also claiming interest @ 18% on the amounts due to him and sought release of his amounts.
13. The grievance of the petitioner is that despite claims raised by him and invoking the arbitration agreement in terms of notice dated 17th November, 2005 neither the amounts have been paid to him nor the claims have been referred to the arbitrator by appointing an arbitrator within 30 days from the date of receipt of the notice. The petitioner has produced the copy of the notice dated 17th November, 2005 Along with the application for appointment of arbitrator and statements of claim sent by him to the respondent.
14. On failure of the respondent to appoint an arbitrator in terms of Clause 25 of the agreement containing arbitration agreement the present petition has been filed under Section 11(6) of the Arbitration and Conciliation Act.
15. Notice of the petition was issued to the respondent and Ms. Smita Shanker, Advocate for the respondent appeared and sought time. Time was given to the respondent to file the reply within four weeks. However, despite the opportunity given to the respondent the reply has not been filed and the right of the respondent to file the reply is closed.
16. The petitioner has made specific averments that there was agreement between the parties containing Clause 25 having arbitration agreement and on account of disputes raised by him and invoking the arbitration agreement, the respondent ought to have appointed an Arbitrator in accordance with agreement.
17. The respondent has not appointed any arbitrator nor any reason has been disclosed for not appointing an arbitrator. The respondent failed to appoint an arbitrator despite invoking the agreement and thereforee he has lost the right to appoint an arbitrator in terms of Clause 25 containing arbitration agreement which contemplates that the disputes shall be referred to the adjudication through an arbitrator appointed by the Commissioner of MCD and no person other than a person appointed by and Commissioner of MCD should act as an arbitrator.
18. A learned Single Judge in Haryana Telecom Ltd. v. Union of India and Anr. 112 (2004) DLT 339 : 2004 (3) Raj 147, had held that since the respondent failed to appoint an Arbitrator within the stipulated time of 30 days of the notice, and even the petition had been filed under Section 11 of the Act, it is for the Court to appoint an Arbitrator. Learned Counsel for the petitioner states that this is a similar position, since in the present case notice was issued to the respondents on 17.11.2005 and was served on the respondent.
19. Learned Counsel has also referred to the judgment of the Division Bench of this Court in Delkon (India) Pvt. Ltd. v. G.M., Bharat Heavy Electricals Ltd. : 120(2005)DLT542 , where it was observed in paras 4 and 5 as under:
4. We have given our careful consideration to the arguments advanced by learned Counsel for both the parties. In view of the law laid down in the case of Datar Switchgears Ltd. v. Tata Finance Ltd. and Anr. IV (2000) CLT 191 : JT 2000 Supp 2 SC 226 it is no more rest integra that the vacancy can be supplied by a party pursuant to the arbitration agreement even after third days of the receipt of the notice. However, once a party approaches the Court and files a petition for appointment by the designated authority of the Chief Justice of that Court under Section 11(6) of the Arbitration and Conciliation Act, the right to supply vacancy by the opposite party is extinguished. If that right stood extinguished on filing of the petition under Section 11(6) of the Arbitration and Conciliation Act, in September 1998 the appointment of an Arbitrator on 3rd May, 1999 could not be made, thereforee in our view, the order passed by the learned Single Judge on 7th May, 1999 suffers from patent illegality. thereforee, the submission of the respondent that the petitioner had appeared before the Arbitrator and the application of the petitioner raising preliminary objections is pending adjudication which inter alias challenges the jurisdiction of the Arbitrator to decide the dispute is of no consequence as from the order reproduced above it was pursuant to the directions passed by the learned Single Judge that the parties were directed to appear before the Arbitrator. The petitioner had no other option but to appear before the Arbitrator and after appearing before the Arbitrator the petitioner has not submitted to the jurisdiction of the Arbitrator, rather has at first opportunity taken the objection that the Arbitrator had no jurisdiction to proceed with the matter.
In this regard the learned Counsel for the respondent is unable to show anything as to why the view taken in Union of India v. R.R. Industries : 120(2005)DLT572 be not followed where it was held that once a party does not supply the vacancy or fails to supply the vacancy before filing of a petition under Section 11(6) of the Arbitration and Conciliation Act, loses the right to supply the vacancy in terms of the arbitration clause. What remains is only the arbitration clause, i.e. the dispute has to be resolved under the mechanism of alternative disputed redressal scheme but no right survives to the respondent to supply the named Arbitrator in the arbitration clause.
20. Another single judge of this Court has also followed the ratio of the judgment of Union of India v. R.R. Industries : 120(2005)DLT572 in another matter Sudhir Gensets Ltd. V. Union of India and Anr. : 125(2005)DLT602 . There is no reason in the facts and circumstances to differ with the ratio laid down in these cases nor any thing to the contrary has been canvassed before me.
21. No reply to the petition has been filed. The respondent not only failed to appoint an arbitrator within 30 days of the receipt of notice dated 17th November, 2005, respondent failed to appoint an arbitrator even after service of the petition seeking appointment of an arbitrator. Consequently the respondent has lost his right to appoint an arbitrator.
22. Faced with these propositions, the learned Counsel for the respondent also agreed for appointment of an independent person as an arbitrator for adjudicate of the disputes between the parties and contended that the Court may appoint any suitable person as an arbitrator.
23. In the circumstances the inevitable inference is that there is a valid arbitration agreement between the parties and the disputes have been raised by the petitioner and the Court will have jurisdiction to appoint an arbitrator in the disputes between the parties.
24. Consequently, considering the facts and circumstances, I appoint Shri B.L. Garg, retired Additional District Judge resident of A/9, Ganpati Apartment, 6 Alipur Road, Civil Lines, Delhi 110054 Ph. No. 9810827815 9810827815 as a sole arbitrator to adjudicate the disputes between the parties. The fee of the arbitrator shall be Rs. 10,000/- per hearing subject to a maximum of Rs. 1,20,000.00. The parties are directed to appear before Shri B.L. Garg, retired Additional District Judge on May 2, 2006 at 04.00 pm. Copy of this order be communicated to the Arbitrator forthwith. The parties are also directed to communicate the order to the Arbitrator. Copies of this order be given also to the parties, dusty.
25. With these directions the petition is disposed of.