AA/23/2011 of M/S MOHINDRA BROS. Vs UOI.TH.MINISTRY OF DEFENCE AND ORS. on 31 December 2012

HIGH COURT OF JAMMU AND KASHMIRAT JAMMU.

AA No. 23/2011

Date of Decision: 31.12.2012M/s Mohindra Bros.ViUnion of India & ors.CORAM:Hon’ble Mr. Justice J. P. SINGH, Judge.

Appearing counsel:For Petitioner(s): Mr. Anil Mahajan, Advocate.For Respondent(s) : Mr. R. P. Jamwal, CGSC.

The petitioner- M/s Mahindra Bros seeks appointmentof Arbitrator on the disputes projected by it in Paragraph|No. 31 of the Petition which are stated to have arisen|between it and the Union of India in respect of Contract|CA No. CEUZ-19/2003-04, Prov. Of OTM Accm for 3[rd]TRD INF BN at Bhadarwah, because Union of India hadrefused to appoint Arbitrator on the ground that resort to arbitration in terms of Condition 70 of IAF 2249, GeneralConditions of Contract forming part of the Contractentered into between the parties could be had only if the|parties agreed therefor in writing, and in any case not untilthe Contract was either completed or otherwise terminated. Union of India contests the petitioner’s request forappointment of Arbitrator urging that having completed|only 75% of the work, the petitioner was not entitled to|seek appointment of Arbitrator unless the work was|

completed by it or was otherwise rescinded. The claims ofthe petitioner are stated false and inflated. ©

According to Union of India, having failed to completethe work even after six years of the original period of|completion indicated in the Contract Agreement and the|extension allowed to it from time to time, the petitioner|was not granted further extension of the Contract period|and was told to first complete the work before its case wasconsidered for extension of Contract.

Heard learned counsel for the parties.

The amount claimed by the petitioner for the worksallegedly executed by him, having been disputed by Union|of India on various grounds, the dispute regarding paymentor otherwise of the claims projected by the petitioner,|therefore, exists between the petitioner and Union of India,which in terms of Condition 70 of IAF 2249, forming part|of the Contract, is referable to arbitration. The only|question that, therefore, needs to be considered 1s as to|Whether or not the petitioner was entitled to seek'appointment of Arbitrator in view of the objection raised|by Union Of India that the Arbitrator cannot be appointed|unless it agreed therefor or the work was otherwise|rescinded.

To examine the issue, regard needs to be had to Condition 70 of the Contract Agreement, which reads thus:

A70. Arbitration.- All disputes, between the parties to theContract (other than those for which the decisionof the C. W. E. or'any other person is by the Contract expressed to be final andbinding) shall, after written notice by either party to the Contract to the other of them, be referred to the sole arbitration of an Engineerofficer to be appointed by the authority mentioned in the tenderdocuments.

Unless both parties agree in writing such reference shall nottake place until after the completion or alleged completion of theWorks or termination or determination of the Contract underCondition Nos. 55, 56 and 57 hereof.

Provided that 1n the event of abandonment of the Works or cancellation of the Contract under Condition Nos. 52, 53 and 54°hereof, such reference shall not take place until alternativearrangements have been finalized by the Government to get theWorks completed by or through any other Contractor orContractors ofAgency or Agencies.

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

If the Arbitrator so appointed resigns his appointment or|vacates his office or 1s unable or unwilling to act due to any reasonwhatsoever, the authority appointing him may appoint a newArbitrator 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, askingthem to submit to him their statement of the case and pleadings indefence.|

The Arbitrator may proceed with the arbitration, exparte, 1feither 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 ofthe parties, enlarge, the time upto but not exceeding one year fromthe date of his entering on the reference, for making and publishingthe award.|

The Arbitrator shall give his award within a period of six|months from the date of his entering on the reference or within theextended time as the case may be on all matters referred to him andShall indicate his findings, along with sums awarded, separately oneach 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.”

Perusal of Condition 70, read as_ whole, demonstrates its object that arbitration may not bepermissible during the period of Contract unless there wasagreement between the parties for reference to arbitrationor in the event of abandonment of Works or cancellation|thereof, until alternate arrangements were finalized by theGovernment to get the Work completed by or through any other Contractor or Agency. The completion of Contractreferred to in the Condition means the period initially fixedfor completion of Contract, of course, including the,extended period thereto. After the expiry of the period ofContract or extension allowed therefor, the agreement ofthe parties and the Proviso appended to Condition 70thereof may not have any application, in that, after theexpiry of period of Contract or extended period thereof,resort to arbitration 1s permissible for referring the matter,to arbitration. Abandonment, cancellation or completion of|work by any other Contractor or Agency would also notoperate as impediment for appointment of Arbitrator whenthe period of Contract had otherwise expired.

Union of India has admitted in its response to thepetitioner's claim that the petitioner was not grantedfurther extension 1n Contract but was directed to complete the Contract without extension thereof. This stand of'Union of India, clearly demonstrates that the Contractstands expired by efflux of time. Its objection to refer thematter to arbitration when the Proviso to Condition was notapplicable and their consent was not otherwise needed,denial of appointment of Arbitrator by them following theprocedure agreed to, amounts to its refusal for appointmentof Arbitrator.

In view of Union of India’s refusal to appointArbitrator despite petitioner’s request therefor, followingthe procedure prescribed in Condition 70 of IAF 2249, the Arbitrator 1s required to be appointed in terms of SectionIl, of the Jammu and Kashmir Arbitration andConciliation Act, 1997 by the Chief Justice or his|designate.

Therefore, in terms of Section 11 (5) of the Jammuand Kashmir Arbitration and Conciliation Act, Sh. Satish|Chander, JI DG (Contracts) Panel of Arbitrators,Chandigarh,GE|ChandimandirOfficeComplexChandimandir, PIN 908543 1s appointed as Arbitrator to)determine the claims that the parties may file before him)after he enters upon reference.

Registrar (Judicial) to inform the Arbitrator of hisappointment to enter upon reference for his Award on theclaims made to him by the parties 1n terms of the Contract,Agreement. |

JAMMU:|Sunita31.12.2012.