Rakesh Constructions through Sh.C.L.Koul vs University of Jammu

This is a petition under section 11 of the Jammu and Kashmir Arbitration and Conciliation Act, 1997 (hereinafter for short referred to as ""the

Act, 1997"") preferred by the petitioner seeking appointment of an Arbitrator on the ground of the failure of the respondents to appoint an

Arbitrator within the period of notice, as given by the petitioner.

The case of the petitioner, in brief, is that in response to NIT dated 13122002 for the construction of: (i) Lecture Halls with bath rooms in the

Department of Computer Science; (ii) Analytical lab and two rooms on first floor of USIC building; and (iii) two class rooms in Law Department,

the petitioner also submitted the tender. The tender of the petitioner was accepted and allotment letter No.UWD/200304/0614 dated 442003 was

issued by the respondents for the aforesaid construction. The allotment letter contained a relevant clause that in the event of any dispute arising out

of the contract, the same was to be adjudicated upon by the ViceChancellor, a nominated Arbitrator. Further case of the petitioner is that the

respondents were required to supply the drawings and other specifications before starting the construction. When the drawings and other

information for execution of working were not provided by the respondents, preliminary work was started by the petitioner. The cement and the

steel provided by the respondents were substandard and the petitioner declined to accept the same and requested for its purchase from the open

market. The same was refused. Therefore, the nonsupply of the drawings and the material for the execution of the work allotted, resulted in

inevitable delay in the execution of the work and occasioned a great loss to the petitioner. The petitioner served a notice dated 25th June, 2003

requesting the respondents for appointment of an Arbitrator for settlement of the dispute between the parties having raised out of the contract

containing Arbitration Clause. That despite receipt of the notice/letter, neither the Arbitrator was appointed nor any information was received in this

behalf from the respondents. Since the respondents failed to appoint the Arbitrator within a period of thirty days of the receipt of the

request/demand for the appointment of Arbitrator to settle the dispute between the parties, it compelled the petitioner to approach the Court for

the appointment of an indepen dent Arbitrator in invoking the powers under section 11 of the Act, 1997.

The respondents in their reply did not dispute the receipt of the demand/request by the petitioner for appointment of an Arbitrator, as the dispute

between the parties had arisen in respect of the arbitration contained in the Arbitration Clause. It is admitted by the respondents that notice dated

25th June, 2003 was received on 30th June, 2003. Further stand of the respondents is that the petitioner, in fact, wanted the basic condition of

NIT as regards the cement and steel to be modified, but the same was rejected. It is also denied that the cement and steel in the store of the

University were substandard, as contended by the petitioner. The Arbitrator, according to the respondents, was appointed vide their letter dated

16082003. It is further contended that delay in executing the work of construction allotted to the petitioner, at site, has resulted in a great loss to

the University. As the matter in dispute has been referred to the Arbitrator ViceChancellor, an independent Arbitrator, at this stage, cannot be

appointed contrary to the terms of the NIT.

Heard the arguments advanced by the learned counsel appearing for the respective parties, in extenso. I have also perused the record,

meticulously, besides relevant provisions of law touching the matter in controversy.

The spinal question that falls for consideration is that whether the respondents could appoint an Arbitrator after the Court has been seized of the

request for the appointment of an Arbitrator, made through the petition under section 11 of the Act. Mr. R. Koul, learned counsel appearing for

the petitioner, submitted that section 11 of the Act deals with the appointment of the Arbitrators. It provides that the parties are free to agree on a

procedure for appointing of an Arbitrator or Arbitrators. Subsections (3), (4) (5) & (6) of section 11 of the Act prescribe the events when a party

may request the Chief Justice or his designate to nominate an Arbitrator and the nomination shall be made by the Chief justice or any person

designated by him. Mr. R. Koul, learned counsel appearing for the petitioner, vehemently urged that in case, before an Arbitrator is appointed, if a

party files an application under section 11 of the Act seeking appointment of an Arbitrator, then the right of other party to appoint Arbitrator

ceases. Whereas Mr. D.S. Thakur, learned counsel appearing for the respondents, on the other hand, submitted that though the appointment of the

Arbitrator was made, but it was not within 30 days period. The appointment was made of an Arbitrator, according to Mr. Thakur, was valid, as it

cannot be said that the right was forfeited after expiry of 30 days from the date of demand/request. His further submission is that there is no

automatic forfeiture of the right to appoint an Arbitrator upon expiry of 30 days.

On a plenary reading of the provisions of section 11 of the Act, it is clearly envisaged that if one party demands the opposite party to appoint an

Arbitrator and the opposite party does not make an appointment within 30 days of the demand, the right to appointment does not get automatically

forfeited after expiry of 30 days. If the opposite party makes an appointment even after 30 days of the demand, but before the first party has

moved the Court under section 11, that would be sufficient. In other words, in cases arising under section 11(6), but where the opposite party has

not made an appointment within 30 days of demand, the right to make appointment is not forfeited but continues, but an appointment has to be

made before the former files the application under section 11 seeking appointment of the Arbitrator.

In the present case, it is not in dispute that the demand for appointment of an Arbitrator was made by the petitioner on 25062003, which stood

received by the respondents on 30062003. When the Arbitrator was not appointed and dispute arising between the parties referred to him for

settlement within a period of thirty days of the demand, the petitioner preferred an application to make appointment and reference of dispute to the

Arbitrator on 882003. The respondents, however, referred the matter to the nominated Arbitrator, ViceChancellor of University, vide their letter

dated 16082003. This clearly shows that the respondents had forfeited their right to nominate and appoint an Arbitrator after it had failed to

comply with the demand made and the petitioner having already filed the petition on 08082003.

After taking conspectus of the aforesaid facts and circumstances, it is held that the appointment of the Arbitrator by the respondents is without

authority of law. Therefore, in exercise of powers conferred under section 11 of the Jammu & Kashmir Arbitration and Conciliation Act, 1997, I

hereby nominate and appoint Mr. Vinod Sharma, Superintending Engineer, JDA, R/O H.No.42, Sector 1A, Trikuta Nagar, Jammu, as the sole

Arbitrator to adjudicate upon the issues, claims and counterclaims of the parties. The fee of the Arbitrator is fixed at Rs. 3,000 per hearing, subject

to ceiling of Rs. 30,000. It may, however, be clarified that fee per hearing so fixed would mean effective hearing. The fee shall be shared equally by

both the parties, subject to outcome of the award.

Petition stands allowed in terms indicated above.