TMI Blog2018 (12) TMI 1929X X X X Extracts X X X X X X X X Extracts X X X X ..... e award Under Section 34 of the 1996 Act. In the present case, the Arbitrator has been appointed as per Clause (65) of the agreement and as per the provisions of law. Once, the appointment of an arbitrator is made at the instance of the government, the arbitration agreement could not have been invoked for the second time. When the parties have specifically agreed for appointment of sole Arbitrator of the person appointed by the Engineer-in-Chief/Chief Engineer, HPPWD, the Appellant was not right in approaching the High Court seeking appointment of an independent Arbitrator - Inspite of extension of time, since the Appellant-contractor had not filed statement of claim, the arbitrator terminated the proceedings Under Section 25(a) of the 1996 Act by proceedings dated 06.08.2014. The Appellant-contractor did not file his statement of claim before the arbitrator since the Appellant had approached the High Court by filing petition Under Section 11(6) of the 1996 Act, probably under the advice that the Appellant can get an independent arbitrator appointed. The Appellant had been writing letters to the arbitrator before the hearing seeking adjournment. An opportunity is to be aff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entered into between the parties and Clause (65) of the General Conditions of Contract contains arbitration clause. The period allowed for completion of work was on or before 04.01.2009. However, extension was granted to the Appellant up to 30.06.2010. The work was completed by the Appellant on 04.06.2011 and payment for the execution of work was made. The Appellant raised a dispute and requested for the appointment of arbitrator vide its letter dated 18.10.2013. Pursuant to the request of the Appellant, the Chief Engineer, HPPWD appointed the Superintendent Engineer, Arbitration Circle, HPPWD, Solan as the arbitrator on 30.10.2013 and the said appointment had been made in terms of Clause (65) of the agreement. The arbitrator entered upon reference on 11.11.2013. The Appellant after requesting for the appointment of arbitrator either remained absent from the proceedings or sought adjournments stating that he intends to challenge the appointment of arbitrator before the Chief Justice as per the provisions of Arbitration and Conciliation Act, 1996. Even after hearing, no statement of claim was filed by the Appellant. On 06.08.2014, arbitration proceedings were terminated Under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Counsel for the State placed reliance upon Board of Control for Cricket in India v. Kochi Cricket Private Limited and Ors. (2018) 6 SCC 287 and submitted that the provisions of the Amendment Act, 2015 shall apply in relation to arbitral proceedings commenced on or after the date of commencement of the Amendment Act, 2015 and shall not apply to the arbitral proceedings commenced prior to the Amendment Act, 2015 unless the parties otherwise agree. The learned Counsel submitted that the provision contained in Clause (65) of the general conditions of the Contract would not amount to agreement of the parties so as to imply application of the provisions of the Amendment Act, 2015. 7. We have carefully considered the contentions of the parties and perused the impugned judgment and materials on record. The point falling for consideration in this appeal is that in the light of the agreement between the parties in Clause (65) of the general conditions of contract whether the Appellant/contractor can challenge the appointment of the Superintendent Engineer, Arbitration Circle as Arbitrator to resolve the dispute between the parties. 8. By the order of HPPWD dated 30.10.2013, the Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acation of office or inability to act shall appoint another person to act as arbitrator in accordance with the terms of the contract. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor, it is also a terms of this contract that no person other than a person appointed by the Chief Engineer, HPPWD, should act as arbitrator and if for any reason that is not possible the matter is not be claim in dispute is ₹ 50,000/- (Rupees Fifty Thousand) and above, the arbitrator shall give reasons for the award. Subject as aforesaid the provision of the Arbitration Act, 1940 or any statutory modification or re-enactment thereof and the Rules made thereunder and for the time being shall apply to the arbitration proceeding under this clause. 10. A perusal of Clause (65) makes it apparently clear that it was permissible to appoint a person by designation and this will be evident from Clause (65), in particular the sentence the arbitrator to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason the Chief Engineer is to appoint another person.... . If appointments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re a named officer is to act as sole arbitrator; and second, where a senior officer like a Managing Director, nominates a designated officer to act as the sole arbitrator. No doubt, such clauses which give the Government a dominant position to constitute the Arbitral Tribunal are held to be valid. At the same time, it also casts an onerous and responsible duty upon the persona designata to appoint such persons/officers as the arbitrators who are not only able to function independently and impartially, but are in a position to devote adequate time in conducting the arbitration. If the Government has nominated those officers as arbitrators who are not able to devote time to the arbitration proceedings or become incapable of acting as arbitrators because of frequent transfers, etc., then the principle of default procedure at least in the cases where Government has assumed the role of appointment of arbitrators to itself, has to be applied in the case of substitute arbitrators as well and the Court will step in to appoint the arbitrator by keeping aside the procedure which is agreed to between the parties. However, it will depend upon the facts of a particular case as to whether such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the requirement of Section 26 (amended Act of 2015) of there being an agreement between the parties that the Act as amended with effect from 23.10.2015 will apply and held as under: 22.... The words any statutory modification or re-enactment thereof and the Rules made thereunder and for the time being in force shall apply to the arbitration... satisfies the requirement of Section 26 of there being an agreement between the parties that the Act as amended with effect from 23rd October 2015 will apply. The Court is not prepared to draw the fine distinction between 'agree' and 'agreed'. Once the amendment to the Clause clearly stated that all statutory modifications and re-enactments would apply, then there is no need for further agreement in that respect after 23rd October, 2015. The plea of the Respondent in this regard is rejected. 23. The net result is that Section 12(5) as amended with effect from 23rd October 2015 would apply. Section 12(5) clearly prohibits the employee of one of the parties from being an Arbitrator. This would straightway disqualify Mr. Kher who happens to be a serving GM of the Respondent. Therefore it is to no avail that the Respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned, namely, the part which reads, ... but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act makes it clear that the expression in relation to is used; and the expression the arbitral proceedings and in accordance with the provisions of Section 21 of the principal Act is conspicuous by its absence. 17. Immediately after the appointment of the Superintendent Engineer, Arbitration Circle as the sole Arbitrator (30.10.2013), the Appellant preferred Arbitration Petition No. 4049/2013 (28.12.2013) before the High Court Under Section 11(6), 14 and 15 of the Arbitration and Conciliation Act, 1996 for appointment of an independent sole Arbitrator. 18. The High Court placed reliance upon the judgment in Antrix Corporation Limited v. Devas Multimedia Private Limited (2014) 11 SCC 560 and held that when the Superintendent Engineer, Arbitration Circle was appointed as the Arbitrator in terms of the agreement (or arbitration clause), the provisions of Sub-section (6) of Section 11 cannot be invoked again. The High Court further observed that in case, the other party is dissatisfied or aggrieved by the appointm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not have been invoked for the second time. 20. As pointed out earlier the Arbitrator has already entered upon reference on 11.11.2013. The Arbitrator had first hearing on 07.12.2013; on which date Appellant-contractor was absent. For the next date of hearing on 13.03.2014 the Arbitrator has recorded the finding that the Appellant-claimant-contractor was absent without any intimation to the Tribunal. In this regard, Mr. Maninder Singh, the learned Senior Council for the Appellant has drawn our attention to the letter dated 12.03.2014 sent by the Appellant requesting for adjournment. Similarly, in the next date of hearings before the arbitrator namely, 03.04.2014, 25.04.2014 and 06.08.2014 the Appellant-contractor did not appear; but only sent the letters requesting for adjournment. On 03.04.2014, the matter was adjourned to 25.04.2014 directing that both parties to come prepared for the next date of hearing on 25.04.2014. Similar was the order passed on 25.04.2014 that both parties have to come prepared for the next date of hearing on 06.08.2014. Since the Appellant-claimant did not appear before the Arbitrator, the Arbitrator terminated the proceedings on 06.08.2014 Under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice warning the Appellant that no adjournment would be granted under any circumstances. Since, no such warning was given, we deem it appropriate to set aside the order of termination. Appellant had made a claim on account of delay as indicated in his letter dated 18.10.2013 under various heads. In the interest of justice, in our considered view, an opportunity is to be afforded to the Appellant to go before the departmental arbitrator (as agreed by the parties in Clause (65) of the general conditions of contract) and the proceedings of the arbitrator dated 06.08.2014 terminating the proceedings is to be set aside. We are conscious that after the Amendment Act, 2015, there cannot be a departmental arbitrator. As discussed earlier, in this case, the agreement between the parties is dated 19.12.2006 and the relationship between the parties are governed by the general conditions of the contract dated 19.12.2006, the provisions of the Amendment Act, 2015 cannot be invoked. 23. In the result, the appeals are disposed of with the following directions: (i) the proceedings of the arbitrator dated 06.08.2014 terminating the arbitral proceedings is set aside. In terms of Clause (65) o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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