M.B. Patil Construction Ltd. vs The Executive Engineer PWP and IWT Department

K.N. Phaneendra, J.—The above said petitions are filed by the petitioner against the respondent seeking appointment of an arbitrator to resolve the dispute between the parties and for adjudication therein. The respondent is represented by its counsel.

There is no dispute between the parties with regard to the entering into the agreement between the petitioner and the respondent herein. There is also no dispute with regard to the arbitration clause mentioned in the agreements stating that if any dispute arises with regard to the agreement between the parties, that should be resolved by means of referring the matter to the arbitrator. As in all the above said matters common question of fact is raised, they have taken up together and disposed of by this common order.

So far as it relates to CMP No. 200005/2014 is concerned, the agreement was entered into between the petitioner and the respondent on 31.10.2011 in respect of the work of "Improvement to Aurad-Murkichincholi-Sedam-Handarki Road SH-122 from Kilometer 186.200 to 199.430 in Sedam Taluka Gulbarga District" Work Indent No. 5547. The parties have also entered into several terms and conditions as mentioned in the agreement.

So far as it relates to CMP No. 200006/2014 is concerned, the agreement was entered into between the parties on 18.11.2011 in respect of the work "Improvements to Basavakalyan-Raichur Road SH-51 (Gulbarga to Wadi) Kilometer 67.00 to 99.80 Gulbarga/Chittapur Taluka of Gulbarga District Under 5054 ORF KPW/2010-11/RD/WORK_INDENT-5994/Call-2". In the said case also parties have entered into several terms mentioned in the agreement which also contain an arbitration clause.

So far as it relates to CMP No. 200007/2014 is concerned, agreement was entered into between the parties on 31.10.2011 in respect of the work "Improvements to Margol cross to tengli cross (SH-126) from Kilometer 0.000 to 5.495 in Chittapur Taluka, of Gulbarga district under 5054 ORF" Work Indent No. 5408. The parties have also entered into several terms and conditions as mentioned in the agreement.

So far as it relates to CMP No. 200008/2014 is concerned, the agreement was entered into between the parties on 14.07.2011 in respect of the work "Improvements to 4 laning of road passing through Raichur City limits of Deosugur-Katgo road SH-13 from kilometers 18.80 to 25.60 (6.80 kilometers) (SP Office, Gunj Circle, Tipusultan Circle, Basaveshwara Circle, Ambedkar Circle, Jagjeevan Ram Circle via JB Road to RTO Circle in Raichur City limits) under 5054-RandB (ORF) in Raichur Taluka and Dist. for the year 2010-11 (KPWD/2010-11/RD/Work_Indent5067".

In the above said agreements, parties have entered into the terms and conditions. The above said all the agreements contain arbitration clause. The agreements contain arbitration clause with reference to the procedure for resolution of the dispute, which is enunciated under the General Clause of the agreement at Article 24.1 to 24.3, the same reads as follows:

"24.1. If the Contractor is not satisfied with the decision taken by the Employer, the dispute shall be referred by either party to Arbitration within 30 days of the notification of the Employer''s decision.

24.2. If neither party refers the dispute to Arbitration within the above 30 days, the Employer''s decision will be final and binding.

24.3. The Arbitration shall be conducted in accordance with the arbitration procedure stated in the Special Conditions of Contract."

Article 4 of Special Conditions of contract refers to the procedure for arbitration which reads as follows:

"4.1 The procedure for arbitration shall be as follows:

(a) In case of dispute or difference arising between the Employer and the Contractor relating to any matter arising out of or connected with this agreement it shall be settled in accordance with the Arbitration and Conciliation Act 1996. The disputes or differences shall be referred to a Sole Arbitrator. The Sole Arbitrator shall be appointed by agreement between the parties; failing such agreement, by the Appointing Authority (any one of the Organizations as per list enclosed in Annexure).

(b) Arbitration proceedings shall be held at Gulbarga, Karnataka, India.

(c) The cost and expenses of arbitration proceedings will be paid as determined by the Arbitrator. However, the expenses incurred by each party in connection with the preparation, presentation, etc., shall be borne by each party itself.

(d) Performance under the contract shall continue during the arbitration proceedings and payments due the Contractor by the Employer shall not be withheld, unless they are the subject matter of the arbitration proceedings."

The above said provisions mentioned in the agreement make it abundantly clear that both the parties have consensus for appointment of sole arbitrator. The arbitrator shall be appointed of-course by the agreement between the parties or by the appointing authority. As could be seen from the provisions under the Arbitration and Conciliation Act, 1996 (for short ''the Act''), Section 11 empowers the Hon''ble Chief Justice for appointment of arbitrator or any person who is delegated with that power can appoint the arbitrator.

Section 11(6) of the Act reads as hereunder:

"11 (6). Where, under an appointment procedure agreed upon by the parties.--

(a) a party fails to act as required under that procedure; or

(b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or

(c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure,

a party may request the Chief Justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.

Sub-clause (7) also says:

A decision on a matter entrusted by sub-section (4) or sub-section (5) or Sub-section (6) to the Chief Justice or the person or institution designated by his is final." 11. The above said provisions empower the Court undoubtedly for appointment of the arbitrator.

In this particular case, the learned counsel for the petitioner has submitted before the Court that any retired District or High Court Judge may be appointed as an arbitrator so that arbitration proceedings can smoothly go on without there being any procedural irregularity.

On the contrary, learned Additional Government Advocate appearing for the respondent submitted that the government has nominated a person by name Basavaraj Koti, retired Chief Engineer may be appointed as arbitrator in connection with the above said four cases. The learned Additional Government Advocate submits that the said arbitrator knows the technical knowhow and he is a technical man who could resolve the dispute between the parties in a proper manner.

Looking to the above said conditions in the agreement, arbitration clause in the agreement and also powers entrusted to this Court under Section 11 of the Act, as there is no consensus between the parties with reference to the appointment of a sole arbitrator it becomes discretion of the Court to appoint sole arbitrator for the purpose of resolving the dispute between the parties. The learned counsel for the petitioner has named Sri Arun Chowdapurkar, a retired District Judge to be appointed as arbitrator. Though the name of the above said District Judge is not seriously disputed or objected by the other side, nevertheless, choice of the government has been mentioned in the memo filed today naming Basavaraja Koti to be appointed as an arbitrator.

Looking to the above said facts and nature of the dispute between the parties and also the proceedings to be conducted in accordance with the provisions of the Act and Rules, I feel it just and necessary if a judicial man who knows the pros and cons of the judicial proceedings, procedure and also the principles of natural justice, is appointed as an arbitrator it would in my opinion avoid any irregular proceedings or illegal proceedings that would ensue while conducting arbitration proceedings. I am not against any appointment of the person who is named by the government but the retired District Judge who has an experience of more than 15 years as District Judge would have come across so many cases including technical dispute between the parties because of the simple reason while sitting as a District Judge he has to handle the cases under Section 34 of the Arbitration Act. Therefore, he would be a better person to resolve the dispute between the parties and adjudicate the rights of the parties in accordance with the facts and circumstances and in accordance with the law. Therefore, it is just and necessary to appoint Sri Arun Chowdapurkar as arbitrator in the above said four cases.

So far as the venue of the arbitration is concerned, the Act itself provides discretion to the arbitrator to fix up the venue for arbitration proceedings depending upon the convenience of the parties. Therefore, this Court cannot venture upon to discuss about the venue. It is left to the sound discretion of the arbitrator after providing an opportunity to both the parties to fix up the venue depending upon the convenience of the parties.

Therefore, it is just and necessary to pass the following order:

"The above said four petitions are hereby disposed of. Sri Arun Chowapurkar, Retired District Judge is appointed as Arbitrator in the above said four cases. The address of the arbitrator has to be furnished by the petitioner''s counsel. The arbitrator is directed to initiate arbitration proceedings in accordance with the Arbitration and Conciliation Act, 1996 and Rules thereunder."