TMI Blog2020 (3) TMI 1046X X X X Extracts X X X X X X X X Extracts X X X X ..... e, Mr. Paritosh Sinha, Advocate ORDER Ashis Kumar Chakraborty, J. This is an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (in short, the Act of 1996 ) at the instance of the claimant against the majority decision passed by the Arbitral Tribunal on November 22, 2018 allowing the objection raised by the respondent with regard to maintainability of the arbitration proceeding. The appellant has also filed an application, GA No. 492 of 2019 praying for stay of operation of the said impugned majority decision of the Arbitral Tribunal. Shortly stated, the facts leading up to the present appeal are that in response to the notice inviting tender issued by the respondent, State of West Bengal for improvement of Chakda-Bongaon and Kapa-Barajaguli Section of State Highway 1 under the West Bengal Corridor Development Project, the appellant being the Joint Venture of two companies, namely A. L. Sudershan Construction Company Limited and Mackintosh Burn Limited submitted the bid which was accepted by the respondent on August 12, 2005 and the contract price was fixed at ₹ 79,96,70,805.00/-. The terms and conditions of the contract relating to the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... readiness, willingness and competence to complete the works under the contract within the stipulated date of completion due to delays and defaults on the part of the respondent and for reasons beyond its control the work was completed in the month of January, 2010. At this juncture, it is to be noted that in this case long after expiry of 28 days from the commencement date, on February 15, 2006 the parties had mutually appointed Shri Narendranath Roychaudhuri, retired Secretary of the Government of West Bengal, as the sole member of the DAB. The appellant claims that due to the delay in completion of the contract it had not only suffered huge loss but the respondent even refused to pay its legitimate dues. By a letter dated May 12, 2012 the appellant referred the disputes and differences arisen between the parties with regard to its claim against the respondent to Shri Raychaudhuri, the sole member of the DAB under Clause 67.1 of the COPA. However, by a letter dated May 27, 2012 Shri Raychudhuri informed the petitioner and the Project Director of the respondent that by letter dated December 29, 2010 he had already expressed that his service as the member of the DAB may not be requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecided in arbitration without the dispute being first referred to the DAB. The claimant appellant contested the said application. On April 7, 2015 the Arbitral Tribunal held that the grounds urged by the respondent in the application under Section 16 of the Act of 1996 would involve questions of the fact and rejected the said application. The Arbitral Tribunal, however, held that their said decision is without prejudice to the rights of the respondent and the question of maintainability of the arbitration proceeding, if raised by the respondent, will be adjudicated at the final stage of the proceeding. On June 1, 2015 the respondent filed its statement of defence, raising objection to the maintainability of the arbitral proceeding, inter alia, on the ground of absence of the reference proceeding before the DAB. Thereafter, the petitioner adduced evidence through its witness. The respondent, however, did not adduce any evidence through any witness. On February 07, 2017 the Presiding Arbitrator passed his decision that the claimant, the appellant herein having not exhausted the procedure of DAB is not entitled to maintain the arbitration proceeding. However, the Arbitrator nominated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e both the parties. He held that appointment of the DAB was the responsibility of both the parties and the letter dated July 26, 2012 addressed to the sole member of the DAB by the claimant with a copy to the respondent cannot be treated as substantial compliance of sub-clause 67.1(d) of the COPA. The Presiding Arbitrator held that when the respondent in the arbitral proceeding did not intimate its consent to the claimant s willingness to the continuance of Shri Raychudhuri as the sole member of the DAB as per sub-clause 67.1(d) of the COPA the claimant ought to have approached the respondent to agree to a proposal of replacement of Shri Raychaudhuri by any other suitable qualified person. Relying on the decision of the Supreme Court in the case of Commissioner of Central Excise vs- Harichand Sri Gopal reported in (2011) 1 SCC 236 cited by the respondent, the Presiding Arbitrator further held that, in case even the respondent kept silence the claimant could have availed of arbitration for resolving the disputes under sub-clause 67.4. He further held that in the present case requirement of sub-clause 67.1(d), which were not complied could not be treated as a minor of irregulari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Arbitral Tribunal holding that the arbitration proceeding is not maintainable are patently illegal and vitiated by perversity. It was argued for the appellant that as per sub-clause 67.1 of the COPA the disputes and differences arising between the parties out of the contract would initially be referred to in writing to the DAB for its decision. As per said sub-clause unless the member or the members of the DAB have been previously, mutually agreed upon by the parties and named in the contract the parties shall, within 28 days of the commencement date jointly ensure the appointment of the DAB. Further, sub-clause 67.1(d) of the COPA contemplated that if the parties fail to agree upon the replacement of a member of the Board of DAB within 28 days of the date on which a member of the Board declines to act or is unable to act as a result of death, disability, resignation or termination of appointment then the appointing body or the official named in the Appendix Bid shall, after due consultation with the parties, appoint such member of the Board, and such appointment shall be final and conclusive. Mr. Mitra pointed out that the in the present case, neither there has been any appoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-compliance of sub-Clause 67.1(d) of COPA is vitiated by patent illegality and perversity. It was further submitted that the decision of the Supreme Court in the case of Hari Chand Sri Gopal (supra) which is an authority for interpretation of an exemption notification issued under the Central Excise Tariff Act, 1985 has no application in this case. Learned Senior Counsel for the claimant appellant pressed for setting aside of the said majority decision of the Arbitral Tribunal. On the other hand, Mr. Jishnu Chaudhuri, learned Counsel for the respondent submitted that the two Arbitrators and the Presiding Arbitrator held that the respondent did not have any opportunity to meet the point of substantial compliance of sub- Clause 67.1 (d) of COPA which was the basis of the majority decision of the Arbitral Tribunal dated February 07, 2018. According to him, a point of the procedural aspect of the arbitral proceeding arose and the Arbitral Tribunal rightly entertained the application for review of the majority decision dated February 07, 2018. It was argued that the decision of the Arbitral Tribunal dated October 01, 2018 recalling the earlier order dated February 07, 2018 suffers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he maintainability of the appeal by the joint venture I find it appropriate to decide such appeal. In the present case, the appellant joint venture was awarded the contract by the respondent. The arbitration agreement is between the appellant joint venture and the respondent is the claimant in the arbitral proceeding. It is the appellant joint venture who was entitled to and invoked the arbitration clause. Further, the respondent has also invoked the arbitration agreement against the appellant joint venture who has executed the contract. The appellant joint venture is the claimant in the arbitral proceeding. Accordingly, the joint venture is entitled to maintain this appeal. This view is supported by the decision of a Co-ordinate Bench of this Court in the case of Munshilal and Sons (supra) cited by the respondent. Order XXX of the Code of Civil Procedure applicable for filing a suit by firms has no application in this case. In the case of Gouranga Lal Chatterjee (supra), a Co-ordinate Bench of this Court was dealing with a case under the Income Tax Act, 1961 and held that in view of the definition of person in Section 2(31)(v) of the same Act a joint venture cannot be treated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties. By the letter dated July 26, 2012 the claimant appellant not only expressed the readiness and willingness in continuance of the service of Shri Raychudhuri as the member of the DAB but also expressed its expectation for a quick response from the respondent employer so that the matter is not kept in abeyance for long. The respondent received the letter dated July 26, 2012 but it did not reply to the same. The respondent did not consent to the proposal of the claimant appellant for the continuance of Shri Raychudhuri acting as a member of the DAB as suggested by the petition. Nonetheless, the respondent even did not intend that a new member of the DAB be appointed in consultation with the claimant appellant. Thus, after waiting for four months, by the letter dated December 26, 2012 the claimant appellant informed the Project Director of the respondent, being the competent authority that it seems that the process of adjudication through DAB is not possible and as such it invoked, arbitration Clause by nominating its Arbitrator. By the letter dated March 15, 2013 addressed to the claimant appellant, the Project Director of the respondent being the competent authority did n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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