Build India Construction Co. vs Union of India (UOI)

Masud, J.—This is an application u/s 20 of the Indian Arbitration Act for filing an arbitration agreement and also for appointment of an arbitrator. The Petitioner''s case is that by three agreements in writing dated June 7, 1966, May 16, 1967 and June 26, 1967, between the Petitioner and the Respondent No. 1, the Petitioner agreed to perform certain construction works at Santragachi, Howrah, outside the jurisdiction of this Court. The said agreement or contracts contained an identical arbitration clause whereby the disputes and differences between the parties were agreed to be referred to the sole arbitration of the person appointed by the Additional Chief Engineer, Central Public Works Department, in charge of the work at the time of the disputes or if there be no Additional Chief Engineer, the administrative head of the Central Public Works Dept.at the time of such appointment.

It is alleged that the Petitioner has executed considerable part of the Respondent''s work under the said three contracts. It is further alleged that disputes and differences arose between the parties in respect of the said three contracts. In para. 6 of the petition the Petitioner has stated that, the Union of India refused to appoint a proper arbitrator to adjudicate upon the said disputes and differences. In the said paragraph references have been made to certain letters copies of which have been annexed to the petition. The Petitioner has now made this present application for adjudication of the said disputes and differences between the parties.

Mr. A. P. Choudhury, on behalf of the Petitioner, has submitted that, admittedly, there is an arbitration agreement in respect of the said- three contracts and the Union of India has not appointed Arbitrators in terms of the arbitration clause and, as such, he had to make the present application. Relying upon Gannon Dunkerley and Co. Vs. Union Carbide (India) Ltd., he has argued that the said agreement should not only be filed in this Court but the Court should appoint an independent Arbitrator from the members of the Bar. The learned Counsel has argued that u/s 20(4) of the Act it is the Court''s mandatory, duty to appoint an arbitrator where the arbitrator in terms of the arbitration clause has not been appointed. According to him, in the present case, there has been no appointed arbitrator and, as such, the Court should appoint an arbitrator on its own.

Mr. Tarun Bose, on behalf of the Respondent, has challenged the maintainability of this application on various grounds. Firstly, he has stated that, in the facts of the present case, reference has already been made and an Arbitrator has been appointed and, as such, application u/s 20 of the Act does not lie. Secondly, it is argued that the Petitioner made an application for an injunction in this Court restraining the Respondents from getting the contracts performed by other contractors. That application was dismissed with costs. Accordingly, this application is barred by the principles of constructive res judicata. His third contention is that the Petitioner has wrongly impleaded K. P. Sinha as Respondent No. 2. The said Mr. K. P. Sinha is not a party to the contracts between the Petitioner and the Union of India. He has, therefore, argued that the application is bad for misjoinder of parties. Fourthly, by the letter dated June 7, 1968, the Petitioner has given a notice u/s 8(1) of the Indian Arbitration Act, 1940, requesting the latter to appoint an arbitrator within 15 days. The Petitioner, having proceeded u/s 8(2) of the Act, is debarred from making the present application u/s 20 of the Act.

In the facts of the present case I was inclined to dismiss this application, but such dismissal would delay the determination of disputes between the parties which might cause injustice to the Petitioner. The Petitioner has referred to various letters written by it to the Union of India, All the said letters relate to agreement No. 16/EE/CCD/66-67. There has been no reference of the other two agreements referred to in prayer ''A'' to the petition, i.e. Nos. 20/EE/CCD of 1967-68 and 21/EE/CCD of 1967-68. Excepting a casual and indirect reference in the Respondent''s letter dated March 21, 1968, to the Petitioner, the disputes and differences in respect of the said two contracts have not been specifically stated either in the correspondence between the parties before the filing of this application nor in the body of the petition itself. Even the said two contracts have not been specifically mentioned or dealt with in the different paragraphs of the petition itself. No letter has been written to the Union of India stating the disputes and differences in respect of the said two contracts nor the Petitioner has requested the Union of India to appoint arbitrators for that purpose. Thus, the Court does not get an opportunity to examine the grounds of the Petitioner for filing the said two agreements. With respect to the agreement No. 16/EE/CCD of 1966-67 the Petitioner has written a letter on June 7, 1968, requesting the Union of India to appoint an arbitrator within 15 days failing which necessary application for appointment of an arbitrator would be made. Fifteen days expired by June 1968. The present application has been made on January 8, 1969. But until February 8, 1969, the Union of India had no knowledge of the present application which; was filed on January 8, 1969. Before they came to know of the present application the Union of India by their letter dated February 3, 1969, appointed Sri Jogindranath being the nominee of the Chief Engineer as the Arbitrator in respect of the disputes relating to the agreement No. 16/EE/CCD of 1966-67, vide annex. ''B'' to the affidavit-in-opposition of K. P. Sinha affirmed on July 29, 1969. The Petitioner replied to the said letter on February 8, 1969, and informed them for the first time that the present application had been made and threatened them that if the said arbitrator would proceed with the reference, the arbitrator would be liable for contempt of Court. The said arbitrator who was appointed by the Union of India in terms of the arbitration clause in due course served notice on the Petitioner and the Respondent for submitting the statement and counter-statement of facts. Thus, it is obvious from the aforesaid dates that the Respondent before its knowledge of the pending application appointed Sri Jogindranath to decide the disputes between the parties in respect of the said agreement No. 16/EE/CCD of 1966-67 in terms of the arbitration clause and as requested by the Petitioner. Reference may be made to Sree Hurdutroy Jute Mills Private Ltd. v. Sree Bajrang Jute Mills Ltd. Unreported judgment of Bose, C.J. and Mitter, J. in Appeal No 98 of 1063, delivered on June 17, 1964 where the learned Judges have laid down that where the reference is already pending application u/s 20 of the Act is not maintainable. In the present case, although strictly speaking, the reference was not pending before the filing of the present application the Respondent did appoint an arbitrator before they had knowledge of the present application. The arbitrator in terms of his letter of appointment also entered reference and gave directions to the parties in connection with the reference. Thus, at the present moment I find that the Union of India has appointed an arbitrator and the arbitrator has taken steps in proceeding with the reference. It is extra-ordinary that these facts have not been disclosed before me when this matter was argued by Mr. Choudhury on behalf of the Petitioner last week. Under the circumstances, I am of opinion that for rendering justice the agreement No. 16/EE/CCD dated June 7, 1966, be filed in this Court and the said Jogindranath do proceed with the reference for adjudication of the disputes relating to the said agreement. This order, however, is made without prejudice to the Petitioner''s right to have the Petitioner''s disputes, if any, determined by the arbitration in respect of contracts Nos. 20/EE/CCD of 1967-68 dated May 16, 1967 and 21/EE/CCD of 1967-68 dated June 26, 1967.

Before I conclude it is necessary for me to mention the other points of law argued by Mr. Bose on behalf of the Respondent. Relying on my judgment in Lakshikanta Bhagchandka v. Thisa (India) Pvt. Ltd. I hold that in the present case the Petitioner has not taken steps u/s 8 of the Arbitration Act so as to debar him from making the present application u/s 20. It is true that the Plaintiff in his letter dated June 7, 1968, has given a notice u/s 8(1) to the Respondent, but in my view the notice u/s 8(1) of the Arbitration Act by itself does not prevent a party to make an application u/s 20(1) of the Act. The Petitioner has not made any application or taken any steps under chap. 2 of the Act before this Court earlier and, as such, notice u/s 8(1) cannot be argued as a part of the proceeding under chap. 2 for the purpose of maintainability of an application u/s 20(1). I also do not accept the contention that this application is barred by the principles analogues to res judicata inasmuch as the Petitioner''s application for injunction was dismissed as withdrawn and was not finally heard and determined. I also do not agree with Mr. Bose that the application is bad for misjoinder of parties. It is true that Mr. K. P. Sinha, Respondent No. 2, is neither a necessary party nor a proper party. But, in view of the fact, that Mr. Choudhury has categorically stated that he does not want any relief against Respondent No. 2, I find no force in Mr. Bose''s contention.

Mr. Choudhury has also argued that the said Jogindranath should not be appointed Arbitrator on the grounds that he has bias against the Petitioner. In the absence of any such allegation in the petition itself I find no justification in accepting his said contention. Further, the arbitration agreement on the basis of which the Petitioner has made this application itself provides that the disputes between the parties shall be referred to the sole arbitration of the person appointed by the Additional Chief Engineer, Central Public Works Department. In the present case, formerly the Additional Chief Engineer, Mr. O. Mutachan, now designated as the Chief Engineer, Central Public Works Department, Calcutta, appointed the said Sri Jogindranath as the sole arbitrator. It is not necessary for me to discuss the decisions laid down in Gannon Dunkerly & Co. v. Union Carbide (India) Ltd. ( Supra ) as Mr. Bose on behalf of the Respondent has not disputed the validity or the applicability of those principles in that case.

Mr. Bose has also contended that the present application is not maintainable u/s 69 of the Indian Partnership Act, 1932, as the Petitioner''s firm is not a registered firm. Mr. Choudhury has made a statement at the Bar that the said firm is a registered firm and he is prepared to produce the same, if so required. Relying on the said statement Mr. Bose did not press the point. (3) Unreported judgment in Special Suit No. 4, of 1968 delivered on June 6, 1968.

In the premises, it is ordered that the agreement "described or numbered as 16/EE/CCD of 1966-67 dated June 7, 1966, be filed in this Court and Sri Jogindranath is appointed as the arbitrator to adjudicate upon the disputes and differences between the parties arising from the said agreement. This is without prejudice to the legal rights of the parties, if any, in respect of the alleged disputes and differences arising out of the agreements Nos. 20/EE/CCD of 1967-68 dated May 16, 1967, and 21/EE/CCD of 1967-68 dated June 26, 1968.

Costs of this application will be costs in the arbitration proceeding.