R.S.B. Project Limited vs State of Haryana and Others

Hemant Gupta, J.—The present petition is for appointment of an Arbitrator u/s 11 of the Arbitration and Conciliation Act, 1996 (for short the ''Act'') in respect of the dispute arising between the parties out of an Agreement dated 2.12.1999. Vide the aforesaid Agreement, Petitioner was given a contract for maintenance of Karnal-Kaithal Road. In the aforesaid Agreement, the employer is defined as Engineer-in-Chief, Haryana PWD (B and R); the Engineer as M/s Carl Bro International a/s Denmark and adjudicator as Shri R.A. Goel EIC (Retd.) PWD, B and R.

The work was completed on 30.4.2002 as per the Contract. Thereafter, the Petitioner submitted its claim to the Engineer-in-Chief on 15.1.2003 (Annexure P-4). Subsequently, final payments have been released on 18.3.2003. It was on 30.4.2003 (Annexure P-5), Shri M.K. Sen, Chief Engineer (Retd.), Punjab PWD, (B and R) was nominated by the Petitioner as its Arbitrator and called upon Engineer-in-Chief to nominate its Arbitrator. Subsequently, when no response was received from the Respondents, the Petitioner requested the President of Indian Road Congress, New Delhi for appointment of an Arbitrator in terms of the Arbitration Clause in the aforesaid Agreement. Since, no action has been taken, the Petitioner filed the present petition for appointment of an Arbitrator under the Act on 9.3.2006.

On behalf of Respondents, it has been stated that the Petitioner has not followed the procedure for resolution of disputes, firstly by an Engineer and later by an Adjudicator. The Petitioner can seek resolution of disputes by an Arbitrator only against the decision of the Adjudicator. Therefore, the petition without taking recourse to the agreed procedure of resolution of disputes is not maintainable.

At this stage, it will be advantageous to reproduce the relevant Clauses from the Agreement. The same are reproduced below:

Engineer''s Decisions

4.1 Except where otherwise specifically stated, the Engineer will decide contractual matters between the employer and the Contractor in the role representing the Employer.

xx xx xx 24. Disputes.

24.1 If the Contractor believes that a decision taken by the Engineer was either outside the authority given to the Engineer by the Contract or that the decision was wrongly taken, the decision shall be referred to the Adjudicator within 14 days of the notification of the Engineer''s decision.

xx xx xx 25. Procedure for Disputes.

25.1 The Adjudicator shall give a decision in writing within 28 days of receipt of a notification of a dispute.

25.2 The Adjudicator shall be paid daily at the rate specified in the Contract Data together with reimbursable expenses of the types specified in the Contract Data and the cost shall be divided equally between the Employer and the Contractor, whatever decision is reached by the Adjudicator. Either party may refer a decision of the Adjudicator to an Arbitrator within 28 days of the Adjudicator''s written decision. If neither party refers the dispute to Arbitrator within the above 28 days, the Adjudicator''s decision will be final and binding.

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

F Special condition of contract

and 2

xx xx xx xx 3. Arbitration GCC (Clause 25.3)

25.3 (a) In case of Dispute or difference arising between the Employer and a domestic contractor relating to any matter arising out of or connected with this agreement, such disputes or difference shall be settled in accordance with the Arbitration and Conciliation Act, 1996. The arbitral tribunal shall consist of 3 arbitrators one each to be appointed by the Employer and the Contractor. The third Arbitrator shall be chosen by the two Arbitrators so appointed by the Parties and shall act as Presiding arbitrator. In case of failure of the two arbitrators appointed by the parties to reach upon a consensus within a period of 30 days from the appointment of the arbitrator appointed subsequently, the Presiding Arbitrator shall be appointed by the President, Indian Road Congress.

xx xx xx

Learned Counsel for the Petitioner has vehemently argued that vide the communication dated 27.6.2002 (Annexure P-3) instead of M/s Carl Bro International a/s Denmark, the Additional Project Director-cum-Superintending Engineer, Haryana, B and R Circle, Karnal was appointed as Engineer w.e.f. 1.7.2002 and that the Petitioner has endorsed the copy of the communication dated 15.1.2003 (Annexure P- 4) to the said Project Director. Therefore, the Petitioner has complied with the procedure contemplated in the Agreement. The Additional Project Director-cum-Superintending Engineer has not decided the claim of the Petitioner, therefore, the Petitioner has no alternative except to seek resolution of the dispute to seek appointment of an Arbitrator in terms of the Clause 25.3 of the Agreement as reproduced above.

I do not find any merit in the said argument raised by learned Counsel for the Petitioner. The communication dated 15.1.2003, addressed to Engineer-in-Chief, Haryana, PWD (B and R), the Petitioner has given entire history to conclude with the following words:

...11.0 We would request that our above claims may kindly be taken on record and settled early to the extent possible, so that the residual items, which we may like to pursue, may be referred to arbitration under the contract terms. We are prepared to attend the office of your goodself at any time convenient to you, for furnishing whatever clarifications may be required of us, in respect of our claims.

Though, the copy of the said letter was endorsed to Additional Project Director-cum-Superintending Engineer but the request of the Petitioner is that the Engineer-in-Chief should narrow down the issues in respect of which the Petitioner can seek adjudication.

In terms of Clause 4.1, the Engineer is required to decide the contractual matters between the parties. If the contractor is aggrieved against the decision of the Engineer, the liberty is given to the Contractor i.e. the Petitioner to approach Adjudicator within a period of 14 days of the notification of the decision of the Engineer. Thereafter the Adjudicator has been given 28 days time for adjudication. Neither the Petitioner approached the Engineer nor the Adjudicator. Therefore, the question of appointment of an Arbitrator in terms of Clause 25.3 of the Agreement does not arise. The Petitioner has not complied with the mechanism for resolution of the dispute aggrieved at the time of the Agreement. The pre-conditions to seek adjudication by an arbitrator have not been satisfied by the Petitioner. Therefore, no Arbitrator can be appointed by this Court u/s 11(6) of the Act.