Shivam Build Con Associates vs Union of India and others

Sindhu Sharma, J

The present petition has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 seeking appointment of an Arbitrator.

The petitioner, a proprietorship concern, which is in the business of construction of roads in the UT of J&K, was awarded a contractor bearing No. CE(P) BCN/01/2023-24 for providing, laying and compaction (with sensor paver) of readymade bituminous (HMP) mix for Bituminous Macadam (BM) 50 mm thick (compacted), Bituminous Concrete (BC) 40 mm thick (compacted), including road marking with thermoplastic paint for resurfacing works between Km 0.00 to Km 10.00 (9.44 EQVT CL-9) on road Patnitop-Nathatop under 52 RCC Sector/760 BRTF Project Beacon in J&K UT.

The contract was alloted to the petitioner on 12.04.2023 and the total value of the contract was fixed at Rs.2,44,10,600/-. Thereafter, the formal work order was issued on 18.04.2023 and R.P. Gupta, AE (Civil), was appointed as Engineer In-charge.

The contention of the petitioner is that he mobilized the machinery and visited the site, but the work remained suspended from 02.05.2023 till 31.05.2023 which resulted in losses to the petitioner. Thereafter, the petitioner on 01.06.2023 requested the respondents to allow the petitioner to resume the work as every day was causing financial loss to the petitioner. The work remained suspended for 29 days till 29.06.2023. Thereafter, the petitioner was informed that the work had been reduced from the original amount of Rs.2,44,10,600/- to Rs.1,50,00,000/-. The said work was accepted by the petitioner and completed within time.

The petitioner submitted his claim for reimbursement of the losses suffered by him and sought release of the same by virtue of communication dated 13.08.2024. The respondents did not respond to the claim of the petitioner. This constrained the petitioner to invoke the arbitration clause of the contract by virtue of communication dated 13.12.2024. It is submitted that despite service of the aforesaid notice, the respondents have failed to act and direct the appointment of an Arbitrator.

Pursuant to the notice issued by this Court, the respondents have caused appearance and filed their response.

In the reply filed by the respondents, allotment of the contract to the petitioner has been admitted. It has also been admitted that the contract was suspended for some period due to inclement weather conditions and subsequently the amount was also reduced due to non-availability of funds. The respondents submit that the petitioner agreed and submitted his willingness to execute the work at the approved rates and the work was completed. The petitioner had, in fact, also accepted the final bill. The notice for appointment of arbitrator was received by the respondents, who vide their reply dated 26.12.2024 stated that in terms of Condition 70 of the General Conditions of Contract, all disputes are to be referred to the sole arbitration of an Engineer Officer to be appointed by the authority.

The execution of the contract is not in dispute. The contract provides for resolution of disputes by reference of the same to arbitration. Clause 70 of the contract reads as under:

Arbitration- All disputes, between the parties to the Contract(other than those for which the decision of the C.W.E. or any other person is by the Contract expressed to be final and binding) shall, after written notice by either party to the Contract to the other of them, be referred to the sole arbitration of an Engineer officer to be appointed by the authority mentioned in the tender documents.

Unless both parties agree in writing such reference shall not take place until after the completion or alleged completion of the Work or termination or determination of the Contract under Condition Nos. 55, 56 and 57 hereof. Provided that in the event of abandonment of the Works or cancellation of the Contract under Condition Nos. 52, 53 or 54 hereof, such reference shall not take place until alternative arrangements have been finalized by the Government to get the Works completed by or through any other Contractor or Contractors or Agency or Agencies.

Provided always that commencement or continuance of any arbitration proceeding hereunder or otherwise shall not in any manner militate against the Government s right of recovery from the contractor as provided in Condition 67 hereof.

If the Arbitrator so appointed resigns his appointment or vacates his office or is unable or unwilling to act due to any reason whatsoever, the authority appointing him may appoint a new Arbitrator to act in his place.

The Arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties, asking them to submit to him their statement of the case and pleadings in defence.

The Arbitrator may proceed with the arbitration, ex parte, if either party, inspite of a notice from the Arbitrator fails to take part in the proceedings.

The Arbitrator may, from time to time with the consent of the parties, enlarge, the time upto but not exceeding one year from the date of his entering on the reference, for making and publishing the award.

The Arbitrator shall give his award within a period of six months from the date of his entering on the reference or within the extended time as the case may be on all matters referred to him and shall indicate his findings, along with sums awarded, separately on each individual item of dispute.

The venue of Arbitration shall be such place or places as may be fixed by the Arbitrator in his sole discretion.

The award of the Arbitrator shall be final and binding on both parties to the Contract.

The respondents, by their own communication dated 26.12.2024, requested the petitioner to furnish the agreement in the prescribed format for appointment of an Arbitrator. The existence of the arbitration clause, as noticed hereinabove, and its invocation by the petitioner vide notice dated 13.12.2024 are not disputed. It is also well settled that in terms of the amendment to the Arbitration and Conciliation Act, 1996, an employee of one of the parties is ineligible to act as an arbitrator and, as such, the arbitrator mentioned in the agreement is excluded from being appointed as arbitrator in terms of the contract.

In the given facts and circumstances, coupled with the statements made at the Bar, the present petition is allowed. Accordingly, with the consent of learned counsel for the parties, Shri Vinod Gupta, Chief Engineer (Retired), is appointed as the Sole Arbitrator, who shall proceed with the matter in accordance with the provisions of the Arbitration and Conciliation Act, 1996 and make the award within the time prescribed under the Act.

A copy of this order be communicated by the Registry to the learned Arbitrator within a period of fifteen days.

The parties shall appear before the learned Arbitrator on a date to be fixed by him. The fee of the learned Arbitrator shall be borne by the parties, subject to the final award to be passed.