Manoj Kumar Agrawal vs Nepa Limited

Sanjay Yadav, J—Heard.

Vide this application under Section 11(6) of the Arbitration and Conciliation Act, 1996, applicant seeks appointment of arbitrator for adjudication of dispute arising out of the contract of sale of 1,20,000 metric tonnes of coal-ash (accumulated stock and fresh generation) which was awarded to the applicant in pursuance to Tender Notice No. MM/CA/38/2002-03 dated 30.8.2002 vide agreement dated 29.10.2002. It appears from record that because of differences between applicant and respondent, led to filing of cases including a Writ Petition No. 4150/2004. To resolve the dispute, the applicant and respondent entered into a understanding recording the terms in the Memorandum of Understanding on 20.10.2004/22.1.2005. The applicant later on 31.5.2006 repudiated the Memorandum of Understanding and sought the settlement of dispute through arbitration by invoking the Arbitration Clause which is in the following terms -

"14. ARBITRATION:

"It is further agreed that in the event of any difference of dispute regarding the execution/performance or satisfaction of this contract or any part thereof, the matter shall be referred first to the Joint Conciliators i.e. Sr. Manager (Commercial) & General Manager (Finance) of Nepa Limited with prior intimation to Nepa Limited for conciliation of dispute and upon failure of conciliation efforts, the matter shall be referred for Arbitration to the Chairman of Board of Directors of Nepa Limited or any other person nominated by him under the provisions of the Arbitration and Conciliation Act, 1996 and Rules framed there under, whose decision shall be final and binding on the parties to the dispute. The cost of Conciliation and/or Arbitration shall be borne by the Applicant."

The claim for settlement through arbitrator led the competent authority appoint one Shri R. Sonwane, Deputy Manager, Nepa Limited as sole arbitrator by order dated 17.2.2007. Applicant, however, raised certain objections and demanded for an appointment of independent arbitrator. Being unsuccessful with the department for appointing an independent arbitrator, applicant approached this Court vide application under Section 11(5) of 1996 Act vide MCC No. 669/2007.

The claim for appointment of an independent arbitrator was turned down by an order-dated 4.10.2007. Dwelling on three fold objections raised by the applicant against the departmental personnel to be appointed as Arbitrator, it was held in MCC No. 669/2007 -

"6. Now the only question remains in this case is whether the petitioner is entitled for appointment of an independent arbitrator or appointment of Shri R. Sonwane, Deputy Manager (Civil) is sufficient under the law.

This application was filed on 26.2.2007 before this Court. The petitioner made a request for appointment of an arbitrator as per Annexure R-3 on 22.1.2007. As per the respondent, Shri R. Sonwane was appointed by letter Annexure R-4 dated 17.2.2007 and his appointment was duly communicated to the petitioner by registered A/D letter Annexure R-5 sent on 19.2.2007. From the perusal of Annexure R-5, it appears that this letter was sent for the delivery to the petitioner by Department of post on 22.2.2007, 23.2.2007 and 26.2.2007, but could not be delivered and ultimately on 27.2.2007 it was delivered to the addressee. The aforesaid facts shows that before filing of this application, the respondent appointed Shri R. Sonwane as an arbitrator to decide the dispute between the parties.

Section 11(4) of the Act provides that if a party fails to appoint an arbitrator within a period of thirty days from the date of receipt of request to do so from the other party, then the arbitrator may be appointed upon the request of the party by this Court. In this case within a period of thirty days from getting the request Annexure R-3 from the petitioner, the respondent appointed arbitrator vide letter Annexure R-4 dated 17.2.2007, so the aforesaid appointment is in accordance with the provisions of section 11(4) of the Act.

Now the second contention of the petitioner is that from letter Annexure R-4 it does not reveal who was Shri R. Sonwane and until and unless his particulars could have been disclosed, the aforesaid appointment was not a proper appointment in the eye of law. The petitioner has filed a letter Annexure P-22 to show this fact that he on getting the letter Annexure R-4, contacted to one R. Sonwane, who intimated to the petitioner that he was not appointed as an arbitrator by the Chairman-cum-Managing Director of respondent. He also stated that he was not competent to be appointed as an arbitrator. But the petitioner has not explained the letter Annexure P-25, by which Shri R. Sonwane, Deputy Manager (Civil), immediately on getting the communication Annexure R-4 intimated to the petitioner that he was appointed as an arbitrator and this letter was sent to the petitioner by Regd. A/D post on 5.3.2007, which can be seen from postal seal affixed on the Regd. A/D letter. The letter was sent to the residence of petitioner on 7.3.2007 and 8.3.2007, so the petitioner was well aware that Shri R. Sonwane, Deputy Manager (Civil) of Nepa Limited was appointed as an arbitrator. So there was no question of any misunderstanding in respect of appointment of an arbitrator. Apart from this the petitioner during the course of hearing has not disputed the fact that he was working as a contractor with respondent Nepa Limited for a period of more than 20 years and various litigations and disputes were going on between the petitioner and respondent and he must be knowing all the officers of respondent. In these circumstance/the contention of petitioner that he could not understand who was Shri R. Sonwane appointed by the respondent as sole arbitrator cannot be believed.

Now the third contention of petitioner is that the Chairman-cum-Managing Director of respondent was prejudiced with the petitioner because of several litigation and allegation of petitioner including some strictures by the Court, so in place of him this Court should appoint an Arbitrator. But in this case petitioner has not sought any relief for the change of arbitrator as required under section 12 of the Act. No relief has been prayed in this application, even by seeking amendment in the relief clause, and until and unless a specific relief is prayed by the petitioner in this regard, petitioner by merely filling a rejoinder cannot challenge the action of respondent, who appointed Shri R. Sonwane, Deputy Manager, (Civil) as sole arbitrator. Apart from this under the agreement Chairman cum Managing Director is empowered to appoint an arbitrator. Petitioner made a request to him for appointment of an arbitrator, and he exercising that power appointed an arbitrator within the time. It will be pertinent to mention here that in the rejoinder filed by the petitioner, petitioner has not alleged any allegations against Shri R. Sonwane, who has been appointed as arbitrator, except the letter Annexure R-4 by which his identity was alleged to be unascertainable.

In view of aforesaid, as the respondent has appointed Shri R. Sonwane, Deputy Manager (Civil), as an arbitrator under the agreement, I do not find it appropriate to appoint some other arbitrator in the matter to resolve the dispute between the parties.

In view of the aforesaid discussion, I do not find any merit in this application and because of appointment of an independent arbitrator by the respondent, this application is dismissed with costs."

This order has been allowed to attain finality. It is now informed that before completion of the arbitration proceedings sole Arbitrator Shri R. Sonwane having retired from services has recused himself from being the Arbitrator.

Clause (a) of sub-section (1) of Section 15 of the 1996 Act mandates that in addition to the circumstances referred to in Section 13 or Section 14, the mandate of an arbitrator shall terminate where he withdraws from office for any reason. In the event whereof, sub-section (2) of Section 15 provides for that "where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced.

In the case at hand, since Clause 14 provides for the mechanism for resolution of disputes and the ground raised by the applicant in support of independent arbitrator having been dwelt upon earlier and negatived. And, that the applicant fails to bring any instance as would establish that the management including the Chief Managing Director is prejudiced against him, no case is made out for appointment of independent arbitrator. The application is, accordingly, dismissed.

The respondents, if they have not substituted the arbitrator in terms of Section 15(2) of 1996 Act, the same be done within thirty days from the date of communication of this order.

The application is finally disposed of. No costs.