Allowed

Globe India Enterprise, v. the Union of India and 3 Ors.

Gauhati HC26 Oct 2021Arb.P./28/2020

Case brief

AI extract

What is this about?

Petitioner sought appointment of an arbitrator for a dispute under Section 11 of the Arbitration Act. Railways objected that the claim exceeded the 20% limit for arbitration per their contract. Petitioner offered to lower the claim.

What did the court decide?

The respondent authorities were directed to appoint an Arbitrator within 45 days to adjudicate the dispute based on the modified claim amount of Rs. 1,36,37,631/-, deeming the original notice effectiv

Globe India Enterprise, Vs the Union of India and 3 Ors. — Arbitration | Gauhati HC (2021)

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Page No.# 1/5

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GAHC010114722020

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THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

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Case No. : Arb.P./28/2020

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Globe India Enterprise, a partnership concern and having its office at IOCL (BGR), Main Gate, Dhaligaon, BTAD in the district of Chirang, Assam and is represented by its duly authorized Power of Attorney Holder Shri Jakir Hussain, son of Late Moniruddin Ahmed, resident of North Bongaigaon, P.O. & P.S. Bongaigaon, in the district of Bongaigaon, Assam,

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……Petitioner

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Versus-

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1. The Union of India, represented by the Secretary, Ministry of Railways, Railway Board, Railway Bhawan, New Delhi.

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2. General Manager/Construction, Office of the General Manager/Con, Northeast Frontier Railway, Maligaon, Guwahati-1.

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3 . The Chief Engineer/Construction-V,

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Northeast Frontier Railway,

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Maligaon, Guwahati-1.

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4. The Deputy Chief Engineer/Con-V, Northeast Frontier Railway, Jogighopa.

……Respondents.

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BEFORE

HON'BLE Mr. Justice N. KOTISWAR SINGH

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For the Petitioner: Mr. G.N. Sahewalla, Sr.Advocate,

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Mr. D. Senapati, Advocate,

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Mr. M. Sahewalla, Advocate.

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For the Respondents: Mr. S. Chakraborty,

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Standing Counsel, Railway.

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Date of Hearing and Judgment : 26.10.2021

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JUDGMENT AND ORDER (ORAL)

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Heard Mr. D. Senapati, learned counsel for the petitioner. Also heard Mr. S. Chakraborty, learned Standing Counsel, Railway for the respondents.

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The present petition has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator on the alleged failure of the respondent authorities to appoint the Arbitrator in terms of the Agreement dated 11.02.2016 entered between the parties. Clause 63 and 64 of General Conditions of the aforesaid Contract Agreement provide for appointment of an Arbitrator to settle disputes.

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Mr. Senapati, learned counsel for the petitioner submits that after the failure of the Railway authorities to clear certain bill amounting to Rs.2,42,12,770.64, which according to the petitioner, the Railway authorities are liable to pay to the petitioner, the petitioner sent a notice on 14.01.2020 under Section 21 of the Arbitration and Conciliation Act, 1996 read with Clause 64.(1)(i) of the General Conditions of the Contract for appointment of arbitrator/arbitrator(s) to adjudicate the dispute relating to the Contract Agreement bearing No. CON/NMX-JPZ/2166 dated 11.02.2016. However, the respondent railway authorities failed to respond to the said notice dated 14.01.2020 compelling the petitioner to approach this Court for appointment of an Arbitrator under Section 11 of the Arbitration and Conciliation

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Page No.# 3/5

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Act, 1996.

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The Railway authorities have filed their affidavit objecting to this claim on the ground that as the amount claimed is beyond 20% of contract amount, the same is not liable for arbitration as provided under Clause 47 of the General Conditions of the Contract.

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Clause 47 of the General Conditions of the Contract reads as follows,

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“47. The provision of Clauses 63 and 64 to the General Conditions of Contract will be applicable only for settlement of claims or disputes between the parties for values less than or equal to 20% of the value of the contract and when claims of disputes are of value more than 20% of the value of the contract, provisions of Clauses-63 & 64 and other relevant clauses of the General Conditions of Contract will not be applicable and arbitration will not be a remedy for settlement of such disputes.”

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It has been accordingly submitted by Mr. S. Chakrabotry, learned Standing Counsel, Railways that as the aforesaid amount claimed in the notice dated 14.01.2020 is above 20% of the contract amount, no arbitration would lie and as such, the appointment of the arbitration does not arise in the present case.

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In response, Mr. Senapati, learned counsel for the petitioner submits that when the petitioner submitted the notice on 14.01.2020 seeking for appointment of an Arbitrator, the respondent authorities did not raise any such objection. In fact, they did not respond to the same and as such, in terms of Section 4 of the Arbitration and Conciliation Act, 1996, it may be deemed that the respondent authorities have waived their right to object to the same, in which event, they were under the obligation to appoint an Arbitrator.

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It has been further submitted by Mr. Senapati, learned counsel for the petitioner that Section 21 of the Arbitration and Conciliation Act, 1996 clearly provides that unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. Accordingly, it has been submitted that since the respondent authorities have not responded to the notice dated 14.01.2020 for appointment of the Arbitrator which was received by them, it will be deemed that they have waived any such right to object and as such, the Court can proceed to appoint an Arbitrator.

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Mr. Senapati, learned counsel for the petitioner further submits that assuming that the aforesaid amount is barred for arbitration as provided under Clause 47 of the General Conditions of the Contract Agreement referred to above, Clause 64(1)(iii) of the Arbitration Clause itself provides that the party may amend or supplement the original claim or defense thereof during the course of arbitration proceedings subject to acceptance by Tribunal having due regard to the delay in making it. It has been submitted that, therefore, the petitioner can certainly lower the claim of the amount by way of amendment to bring it within the ceiling of 20% mentioned under Clause 47 of the General Conditions of the Contract Agreement.

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Mr. Senapati, learned counsel for the petitioner has further submitted that not only the Arbitration Agreement but also the statute also provides for making such amendment of the claimed amount as mentioned under Section 23(3) of the Arbitration and Conciliation Act, 1996 which provides that unless otherwise agreed by the parties, either party may amend or supplement his claim or defence during the course of the arbitral proceeding, unless the arbitral tribunal considers it inappropriate to allow the amendment or supplement having regard to the delay in making it.

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Therefore, the petitioner has volunteered to lower the claimed amount to bring it within the aforesaid 20% ceiling. Under the circumstances, there should not be any bar on the part of the Court to proceed to appoint the Arbitrator.

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Mr. Chakraborty, learned Standing Counsel, Railway authorities, have submits that in the present case, provisions of Section 4 of the Arbitration and Conciliation Act, 1996 will not be applicable for the reason that arbitration proceeding has not yet started and the amendment of the claim will arise only when the arbitration has started. Since in the present case the arbitration has not yet started, the question of considering reducing the claimed amount also does not arise.

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Mr. S. Chakraborty further has submitted that if the petitioner is agreeable to reduce the claimed amount to bring it within the 20% of the agreement, he would be at liberty to submit a fresh notice with the reduced claim amount to enable the Railway authorities to appoint an Arbitrator.

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Mr. Senapati, learned counsel for the petitioner, however, submits that it will

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unnecessarily entail delay in the arbitration proceeding and as such, necessary direction may be issued now for appointment of an Arbitrator in terms of the reduced claim amount as mentioned in the affidavit-in-reply.

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Having heard the learned counsel for the parties and on considering the materials on record, this Court has noted that there is a specific provision under Clause 47 of the Arbitration Agreement which provides for arbitration in respect of claim of an amount which is less than 20% of the value of the Contract and in respect of any claim which is above 20% of the claim, the arbitration will not be applicable. This Court has also noted the submission made by the learned counsel for the petitioner as mentioned in his affidavit-in-reply filed on 22.09.2021 that though the 20% of the total contract value of Rs.7,31,00,841/- amounts to Rs.1,46,20,168/- and the petitioner has volunteered to lower the claim amount to Rs.1,36,37,631/-, in which event, it will be less than 20% of the total value of the Contract. In such event, the case of the petitioner will be squarely covered by Clause 47 of the Contract Agreement and accordingly, the respondent authorities are bound to appoint the Arbitrator in terms of the Contract Agreement.

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This Court also having considered the submission advanced is of the view that though ordinarily the matter could have been referred to the Railway authorities for appointment of an Arbitrator after receiving a fresh notice from the petitioner, since the petitioner themselves have categorically stated in their affidavit-in-reply that they are willing to reduce the claimed amount to Rs.1,36,37,631/- which will be within the ceiling amount under Clause 47 of the Contract Agreement, rather than directing the petitioner to submit another fresh notice, this Court would hold that the earlier notice dated 14.01.2020 shall be deemed in respect of the aforesaid modified amount of Rs.1,36,37,631/-. Accordingly, the respondent authorities will act upon the said notice dated 14.01.2020 for appointment of an Arbitrator as expeditiously possible preferably within a period of 45 (forty five) days from today.

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With the above observation and direction, the present petition stands disposed of.

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JUDGE

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Comparing Assistant

Globe India Enterprise, v. the Union of India and 3 Ors.

Case brief

What is this about?

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Globe India Enterprise, v. the Union of India and 3 Ors.

Case brief

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