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Judgment
M. Chockalingam, J.—The plaintiff has come forward with this suit seeking for an appointment of an independent arbitrator to decide the
disputes between the plaintiff and the defendant.
The learned counsel appearing for the plaintiff would submit that pursuant to the tender notice dated 22.4.89, the defendant appointed the
plaintiff as its contractor for the transportation and handling of materials; that there was an agreement dated 9.8.89 between the parties in that
regard; that as per the agreement, the defendant was empowered to appoint a sole arbitrator for the adjudication of all the disputes arising out of
the contract; that the plaintiff has no choice in the said appointment; that the defendant extended the period of contract by six months and called for
a tender for the appointment of a contractor in the place of the plaintiff; that at the request of the defendant, the plaintiff continued to perform the
contractual obligations beyond 31.5.91 demanding enhanced rates quoted; that during October 1991, the plaintiff terminated the contract with the
expiry of 30.11.1991; that yet the defendant extended the period of contract by 6 months from 1.12.91 to 31.5.92 on the same terms and
conditions; that since the defendant arbitrarily delayed the appointment of the contractor, the plaintiff filed a writ petition No.15944/91 for the issue
of writ of mandamus, wherein notice of motion was ordered; that though the plaintiff made a conditional offer to perform the contractual obligations
after 30.11.91 subject to the payment of the rates quoted in the tender, the defendant did not agree for the same but insisted upon the plaintiff to
carry on the obligations on the old rates, and thus, the plaintiff filed a suit in C.S.No.1435 of 1991 before this Court to set aside the certain clauses
in the agreement; that this court granted an order of interim injunction in O.A.No.869/91 restraining the defendant from extending the contract; that
on 20.12.91, this Court vacated the order of interim injunction; that the appeal in OSA No.5 of 1992 there from was also dismissed; that the
defendant by a letter dated 8.1.92 terminated its contract with the plaintiff and by another letter dated 10.1.92 informed the plaintiff that the loss to
the extent of Rs.10 lacs has been caused to it on account of the breach committed by the plaintiff upto 10.1.92; that the defendant has also
threatened to invoke the bank guarantee, and hence, the plaintiff filed another writ petition in W.P.No.371 of 1992 to declare that the threatened
act of the defendant is illegal; that in the said writ petition, notice of motion was ordered; that W.P.No.15944 of 1991 and W.P.No.371 of 1992
were dismissed; that the plaintiff is also having a claim for Rs.12 lacs against the defendant being the excess expenses incurred in the performance
of the contract; that the adjudication of the disputes by the nominee or by an employee of the defendant is not feasible and should not be resorted
to; that the same is against the principles of natural justice that no person can be a judge of his own case; that it is also pertinent to note that the
disputes cannot be decided by a layman; that the defendant''s nominee should not be a fit and proper person to decide such an issue; that the
apprehension of bias on the part of the sole arbitrator to be appointed by the defendant is well founded; and hence, an independent arbitrator has
to be appointed to decide the disputes that have arisen between the plaintiff and the defendant.
Countering to the above contentions of the plaintiff''s side, the learned counsel appearing for the defendant would urge that the suit was filed for
appointment of an arbitrator for adjudicating upon certain disputes arising out of an agreement dated 22.4.89 which provides for arbitration; that
the present proceedings are not bona fide; that the execution of the contract and its extension are admitted; that since the plaintiff breached the
terms of the contract, the bank guarantee in the sum of Rs.8 lacs was invoked and encashed; that the defendant suffered damages; that it is
pertinent to note that the plaintiff did not make any demand for appointment of an arbitrator in terms of the contract; that this court has no
jurisdiction to vary the terms of the contract, and thus, the suit is wholly misconceived; that having contracted for the appointment of an arbitrator
by ONGC, the plaintiff cannot turn round and set up a case to wriggle out of the contract; that it remains to be stated that there was no name
suggested for appointment; that the arbitration clause provides that no person other than a person appointed by the Commission should act as an
Arbitrator; that the suit is devoid of merits, and hence, the same has to be dismissed.
After careful consideration of the rival pleadings and submissions made by the respective counsel, the court is of the view that the plaintiff''s
request for an appointment of an independent arbitrator cannot be granted.
Admittedly, the agreement entered into between the parties has an independent clause as to arbitration. Clause 21(1) of the agreement dated
9.8.89 reads as follows:
ARBITRATION:
21.1. All questions and disputes or differences relating to or arising under these terms and conditions or as to any other question, claim right, matter
or thing whatsoever in any way arising out of or relating to the terms and conditions of the contract or otherwise concerning the works or the
execution or failure to execute the same whether arising during execution of the contract or after the completion or abandonment thereof, shall be
referred to sole arbitration of the persons appointed by the Commission. There will be no objection to any such appointment that the Arbitrator is
an employee of Commission, that he had to deal with the matters to which the contract relates and that in the course of his duties as an employee
of Commission, he had expressed view on all or any of the matters in dispute and differences. The Arbitrator to whom the matter is originally
referred, being transferred or vacating the office or inability to act for any reason, the Commission at the time of such transfer, vacation of office or
inability to act, shall appoint another person or act as Arbitrator in accordance with the terms and conditions of the contract. Such person shall be
entitled to proceed with the reference from the stage at which it was left by his predecessor. It is also a term of this contract that no person other
than a person appointed by the Commission as aforesaid should act as Arbitrator and if for any reason that is not possible the matter is not to be
referred to arbitration at all.
It cannot be disputed that the said Arbitration Clause would bind both the parties. As per the said Clause, an Arbitrator has to be appointed by the
Commission on the request of the plaintiff. It is not the case of the plaintiff that they have made any request for the appointment of an arbitrator or
any arbitrator was appointed at any point of time. It is pertinent to note that the plaintiff has already filed a suit in CS 1435/91 to set aside some of
the Clauses under the agreement between the parties including the arbitration clause, stated supra. During the pendency of the said suit, the plaintiff
has filed this suit seeking the relief of appointment of an independent arbitrator and has withdrawn the earlier suit filed to set aside the arbitration
clause.
The learned counsel for the plaintiff would submit that the plaintiff has got a reasonable apprehension that if the arbitrator is appointed by the
Commission, it would be prejudicial to the interest of the plaintiff. Having agreed for an arbitration clause, as found under Clause 21(1) of the
agreement, the plaintiff cannot now be permitted to say that an independent arbitrator has to be appointed. The court is of the view that the
apprehension of the plaintiff at this stage is unfounded and bereft of reasons. The court is also of the view that the instant suit filed by the plaintiff
even before the appointment of an arbitrator as per Clause 21(1), for appointment of an independent arbitrator is pre mature, and hence, the suit is
devoid of merits, and the same is liable to be dismissed.
In the result, this suit is dismissed. There shall be no order as to the costs.