Mahesh C. Puri vs State of H.P. and another

Surjit Singh, Judge

Work, with an estimated cost of `6,15,77,308/- , for construction of a road, was awarded to the petitioner, by Executive Engineer, Mandi Division No. 1, respondent No. 2 herein, vide agreement, Annexure C-1. Agreement provided that in case of a dispute, arising between the parties, the same shall be settled by competent authority, named in the agreement. As per estimated cost of work, competent authority, in this case, was the Chief Engineer.

A dispute having arisen, because of non availability of the site, on which road was to be constructed and the petitioner''s machinery and labour having remained idle on the site for quite some time, petitioner sought damages. He wrote letter, copy Annexure CR-1 to the Whether reporters of the local papers may be allowed to see the judgment? Executive Engineer, on 9th May, 2011. The Chief Engineer refused to settle the dispute, saying that not he but the Superintending Engineer was the Competent Authority. Petitioner wrote back, vide Annexure CR-2, that on account of cost of the work being more than `60,00,000/- , he alone was the Competent Authority. Thereafter, there was no response. Petitioner then approached the Engineer-in- Chief, for appointment of an arbitrator, under clause 25 of the agreement, Annexure C-1, which says that in case a party is not satisfied, after exhausting the disputes redressal system, provided under clause 24, it may approach the Engineer-in-Chief or the Chief Engineer (Central Zone) for appointment of an arbitrator. Engineerin- Chief, who was approached by the petitioner, vide Annexure C-2, which is dated 30th May, 2011, did not appoint any arbitrator, so the petitioner filed the present petition, u/s 11 of the Arbitration and Conciliation Act, for appointment of arbitrator, after lapse of 30 days time, prescribed in Section 11(5) of the Act.

In the reply, it is stated by the respondents that disputes settlement system, provided in clause 24 of the agreement, having not been exhausted, question of appointment of an arbitrator, under clause 25, does not arise. Also, it is stated that now Arbitrator has been appointed.

I have heard Learned Counsel for the petitioner as also learned Assistant Advocate General.

Looking to the facts and circumstances of the case, as narrated hereinabove, while summing up the facts, respondents'' plea that petitioner has not exhausted the remedy, provided in clause 24, cannot be accepted. Petitioner did approach the competent authority, who is the Chief Engineer, for settlement of dispute, in accordance with clause 24 of the agreement, vide letter dated 9th May, 2011, copy Annexure CR-1. In the said letter Annexure CR- 1, facts relevant for settlement of the dispute, are stated in detail. Competent authority was required to have settled the dispute within 45 days, as per clause 24. The said authority refused to settle the dispute. Failure on the part of the competent authority to settle the dispute amounts to non-satisfaction of the petitioner with the dispute redressal system, provided in clause 24 of the agreement.

Engineer-in-Chief, who was approached through letter Annexure C-2 to appoint an Arbitrator, was required to appoint the Arbitrator, within thirty days of the receipt of Annexure C-2. Admittedly, he did not appoint the Arbitrator, within the aforesaid time limit. Thereafter, the petitioner filed the present petition on 10th August, 2011. It is during the pendency of the present petition that Arbitrator has been appointed by the Engineer-in-Chief. Petitioner''s counsel submits that appointment of Arbitrator, after the expiry of the time prescribed in Section 11(5) of the Arbitration and Conciliation Act and that too during the pendency of the petition, is no appointment, as per Clause- 25 of the Arbitration Agreement, Annexure C-1. I fully agree with the submission made by the Learned Counsel.

In view of the above stated position, present petition is allowed. It has been pointed out that two other similar matters have been referred for arbitration to Shri M.D. Sharma, retired District & Sessions Judge. So, this matter is also referred to said Shri M.D.Sharma. His fee is fixed at `50,000/- , inclusive of ministerial expenses, which shall be paid, in the first instance, by the petitioner. Ultimate liability for payment of arbitrator''s fee shall be determined by the arbitrator himself.

Disposed of.