M/s Shekhar Traders, through its Sole Proprietor Mr. Addya Tiwari Vs The Chief Engineer (Nh), U.P. Public Works Department, Lucknow and 3 Others

Neutral Citation No. - 2025:AHC-LKO:38445

Court No. - 8

Case :- CIVIL MISC. ARBITRATION APPLICATION No. - 102 of 2024

Applicant :- M/S Shekhar Traders, Through Its Sole Proprietor Mr. Addya Tiwari Opposite Party :- The Chief Engineer (Nh), U.P. Public Works Department, Lucknow And 3 Others Counsel for Applicant :- Apoorv Dev,Prashant Kumar Singh Counsel for Opposite Party :- C.S.C.

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Hon'ble Jaspreet Singh,J .

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Heard learned counsel for the petitioner as well as the learned Standing Counsel for the State-respondents.

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The instant petition has been preferred under Section 11(6) of the Arbitration and Conciliation Center, 1996 for seeking appointment of an Arbitrator.

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At the outset, it will be noticed that petitioners have filed a supplementary affidavit along with which they have brought on record the contract bond as Annexure SA-1.

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It is this bond dated 14.06.2011 which indicates that a contract was entered between the petitioner and the respondents. A complete Dispute Resolution Mechanism has been provided. It states that in any case any dispute arises, at the first instance, it shall be referred to the Dispute Review Expert (hereinafter referred to "DRE"). In case if the decisions of their DRE is not to the satisfaction of any of the contracting parties then in terms of Clause 25.3 (a) the disputes can be referred for arbitration.

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The said clause further indicates that the parties would make an attempt as far as possible to get or agree for appointment of a sole Arbitrator failing which the Arbitral Tribunal shall consist of 3 Arbitrators, one to be appointed by the employer and the other by the Contractor and the two party nominated Arbitrators would attempt to appoint by consensus a Presiding Arbitrator, however, if they failed to reach a consensus within 30 days of their respective appointments, the Presiding Arbitrator shall be appointed by the Council, Indian Road Congress.

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It is the case of the petitioners that the contract of the petitioner was terminated on 13.04.2013 and thereafter being aggrieved the petitioner had escalated the disputes and invoked the good

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offices of the respondents for referring the matter to the DRE. Initially, the DRE was appointed, however, the said DRE had tendered his resignation and consequently by the subsequent letter which has been brought on record as Annexure No. 15 dated 14.11.2018, Smt. Chitra Swaroop was appointed as the DRE.

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The record further indicates that the DRE entered into the disputes and made her decision on 13.09.2019, a copy of which has been brought on record as Annexure No. 16. Since certain directions were given by the DRE to the respondents to calculate certain amount which was payable to the petitioners within a time frame which was not done, consequently, the petitioner thereafter a writ petition before a Division Bench of this Court bearing Writ-C No. 27905 of 2019 (M/s Sekhar Traders Vs. State of U.P. and others). The said writ petition came to be disposed of by a Division Bench vide order dated 12.07.2022, a copy of which has been brought on record as Annexure No. 1.

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The Division Bench in its order had directed the respondents to finalize their re-calculation process as provided by the DRE in its order dated 13.09.2019 within a period of six weeks, however, it is the case of the petitioner that despite the categorical directions given by the Division Bench, the respondents still did not re-calculate. The petitioner being aggrieved thereafter invoked the arbitration clause by means of its letter dated 16.12.2022. By the said letter, the petitioner had suggested the name of four persons and consent was sought from the respondents on their appointment as a sole Arbitrator but it also stated that the respondents did not concur with the names as forwarded by the petitioners, however, vide letter dated 28.11.2019 they provided certain other names of four persons who as per the petitioners were the retired officials of the respondents, a copy of the said letter has been brought on record by the respondents along with their counter affidavit dated 14.02.2025.

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It is thus urged that the process for appointment of the Arbitrator having failed, the petitioners invoked the jurisdiction of this Court in terms of Section 11 (6) of the Act of 1996 by means of the instant petition.

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The learned Standing Counsel has pointed out that the very fact that the petitioner defaulted in invoking the DRE mechanism which provided for invocation of the same within 28 days of the dispute but having failed to do so further proceedings could not be held and for the said reason it is urged that the said grounds upon which the petitioners have approached this Court is not

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tenable and the petition deserves to be dismissed.

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The Court has heard learned counsel for the parties and also perused the material on record.

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There are certain undisputed facts that emerge from the record and they are:-

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(i) That an agreement in shape of a contract bond was entered between the parties on 14.06.2011.

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(ii) It is also an undisputed fact that the said contract bond provided for complete dispute resolution mechanism.

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At this stage, before proceeding any further, it will be worthwhile to take a note of the arbitration clause contained in the said bond. For the ease of reference Clause 25.3 (a) to (f) is being reproduced hereinafter:-

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"25.3 (a) In case of Dispute or difference arising between the Employer and a domestic contractor relating to any matter arising out of of connected with this agreement, such disputes, or difference shall be settled in accordance with the Arbitration and Conciliation Act, 1996. The parties shall make efforts, to agree on a sole arbitrator and only if such an attempt does not succeed and the Arbitral Tribunal consisting of 3 arbitrators one each to be appointed by the Employer and the Contractor and the third Arbitrator to be chosen by the two Arbitrators so appointed by the Parties to act as Presiding Arbitrator shall be considered. 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 Council, Indian Roads Congress.

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(b) The Arbitral Tribunal shall consist of three Arbitrators one each to be appointed by the Employer and the Contractor. The third Arbitrazor shall be chosen by the two Arbitrators so appointed by the Parties, and shall act a 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 Council, Indian Roads, Congress.

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(c) If one of the parties fails to appoint its arbitrator in pursuance of subclause (a) and (b) above within 30 days after receipt of the notice of the appointment of its arbitrator by the other party, then the Council, Indian Roads Congress shall appoint the arbitrator. A certified copy of the order of the Council, Indian Roads Congress, making such an appointment shall be furnished to each of the parties.

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(d) Arbitration proceedings shall be held in India, and the language of the arbitration proceedings and that of all documents and communications between the parties shall be English.

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(e) The decision of the majority of arbitrators shall be final and binding upon both parties. The cost and expenses of Arbitration proceedings will

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be paid as determined by the arbitral tribunal. However, the expenses incurred by each party in connection with the preparation, presentation, etc. of its proceedings as also the fees and expenses paid to the arbitrator appointed by such party or on its behalf shall be borne by each party itself.

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(f) Performance under the contract shall continue during the arbitration proceedings and payments due to the contractor by the owners shall not be withheld, unless they are the subject matter of the arbitration proceedings."

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(iii) It is also an undisputed fact that Clause 25.3 (a) clearly states that the parties shall endevour to agree on a sole arbitrator, however, in case if such an attempt fails then the Arbitral Tribunal is to consist of 3 members; one to be appointed by the Contractor, the other to be appointed by the Employer which refers to the respondents and both the party nominated Arbitrator would endevour to get a Presiding Arbitrator appointed by consensus, however, in case if they failed, the parties were required to get the Presiding Arbitrator by the Council, Indian Road Congress.

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Another un-disputed fact that emerges from the record is that once the petitioner had sent his notice invoking the arbitration dated 16.12.2022 whereby the names of four persons proposed, however, the respondents (though say that they do not receive the same), however, along with their counter affidavit a letter addressed to the petitioner has been placed on record dated 28.01.2019 whereby the respondents had also furnished names of four retired officials of the Department.

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It is also an undisputed fact that despite the exchange of the aforesaid correspondence i.e. to say that the letter of the petitioners dated 16.12.2022 as well as the letter dated 28.11.2019, the fact that emerges is that there was no consensus between the parties regarding the name for appointment of the sole Arbitrator.

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Now, in light of the aforesaid undisputed fact, the moment, the two parties could not agree on any name to act as the sole Arbitrator, the default mechanism contained in the disputed resolution clause 25.3 (a) triggered and then it was the petitioner or the respondent as the case may be to have appointed their own party-nominated arbitrator and then require the other party to appoint their nominee Arbitrator

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A specific query was put to the learned counsel for the petitioner as to the fact that once the aforesaid two letters were exchanged whether the petitioner had appointed their party nominated arbitrator and called upon the respondents informing

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them of the same as well as requiring them from getting their party nominated Arbitrator. A categorical reply has been given by learned counsel for the petitioner that no such notice was issued.

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In the aforesaid facts and circumstances, once the Arbitration Clause which provides for a complete procedure for appointment of an arbitrator has not been complied with rather the fact which is clear and certain between the parties and that is the fact that both had given or exchanged names suggested by them for seeking the consent of the other party but both refused to give their consent for anyone name as proposed either by the petitioner or by the respondent. In the said circumstances, the only option which was available with the petitioner was to have appointed his party nominated arbitrator and could have called upon the respondents to do so as as per the arbitration clause, it would be a Tribunal comprising of three Arbitrators which were to be put into place, however, since the petitioner himself has not brought any material on record to establish that the petitioner had appointed the party-nominated Arbitrator rather he admits that there is no such letter given, consequently, this Court finds that the petition preferred by the petitioner is prematured at this stage and cannot be sustained as the petitioner has not followed the Arbitration Clause for getting the Arbitral Tribunal constituted, accordingly, it is dismissed leaving it open for the petitioner to invoke the arbitration clause appropriately and in case if the parties are unable to get an Arbitral Tribunal constituted in terms of the Arbitration Clause contained in the Contract Bond then liberty shall be available to the petitioner to approach this Court.

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O rder Date :- 2.7.2025 Asheesh/-

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Digitally signed by :- ASHEESH KUMAR High Court of Judicature at Allahabad, Lucknow Bench

M/s Shekhar Traders, through its Sole Proprietor Mr. Addya Tiwari v. The Chief Engineer (Nh), U.P. Public Works Department, Lucknow and 3 Others

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M/s Shekhar Traders, through its Sole Proprietor Mr. Addya Tiwari v. The Chief Engineer (Nh), U.P. Public Works Department, Lucknow and 3 Others

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