Allowed

Firm M/S Banshi Lal Vishnoi v. Chief Engineer, Public Works Department

Rajasthan HC16 Aug 2023ARBAP/16/2019

Case brief

AI extract

What is this about?

The High Court appointed a sole arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 to adjudicate a dispute regarding unpaid work dues. The court found the arbitration clause in the contract was validly invoked despite the respondent's claims of procedural non-compliance.

What did the court decide?

Appointment of Hon'ble Shri Justice A.K. Mathur as the sole Arbitrator.

Firm M/S Banshi Lal Vishnoi Vs Chief Engineer, Public Works… — Arbitration | Rajasthan HC (2023)

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HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR

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S.B. Arbitration Application No. 16/2019

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Firm M/s Banshi Lal Vishnoi, A Class P.w.d. Contractor Through Its Partner Bansi Lal, Aged 65 Years , S/o Shri Lekhram B/c Vishnoi, R/o Behind Bal Bharti School, Gangashahar Road, Bikaner.

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----Petitioner

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Versus

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1. Chief Engineer, Public Works Department, Government Of Rajasthan, Jaipur

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The Additional Chief Engineer, Public Works Department Zone, Bikaner.

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The Superintending Engineer, Public Works Department, District Division 1St, Bikaner.

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State Of Rajasthan, Through District Collector, Bikaner.

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----Respondents

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For Petitioner(s)	: Mr.	Govind Suthar
For Respondent(s)	: Mr.	Rajat Arora for
	Mr.	K.S. Rajpurohit AAG.

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HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI

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Judgment

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Reserved on 04/08/2023 Pronounced on 16/08/2023

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The instant arbitration application has been filed by the applicant-Firm (carrying on the business of Civil Constructions, Road Constructions and all civil works assigned to it by the Public Works Department), under Section 11 (6) of the Arbitration and Conciliation Act, 1996 ( hereinafter referred to as ‘Act of 1996’ ) claiming the following reliefs:-

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“(i) by an appropriate order or direction, the Hon’ble Court may appoint an impartial Arbitrator invoking the powers under Section 11(6) of the Act of 1996 with directions to enter into reference, complete the proceedings and pass the

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[ARBAP-16/2019]

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(2 of 7)

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award within such time as may be determined by this Hon’ble Court.

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(ii) Any other appropriate order or direction which this Hon’ble Court may deem fit just and proper in the facts of the case may kindly be passed in favour of the petitioner.”

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A contract was executed between the applicant and the respondents on 26.05.2015, but on count of certain dispute arose between them, the applicant served a notice dated 14.01.2016 demanding the due amount; thereafter, the applicant again served a legal notice through its Counsel on 17.09.2016 and demanded the due amount, along with compensation; failing which, the applicant would initiate a proceeding for appointment of an Arbitrator. But despite the same, the grievance of the applicant was not redressed by the respondents.

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2.1. The applicant thereafter, filed an application under Section 8 of the Act 1996 before the learned District Judge, Bikaner, which was then was transferred to the learned Commercial Court, Jaipur; the said application was rejected on 17.02.2018 on the ground of the same not being maintainable; the applicant should file an application for appointment of an Arbitrator before the appropriate forum, as per law. Thereafter, when the grievance of the applicant still subsisted, the present application has been preferred claiming the afore-quoted reliefs.

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Learned counsel for the applicant submitted that the respondents have not paid the due amount of the work as per the contract in question, and therefore, it is necessary to refer the

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(3 of 7)

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[ARBAP-16/2019]

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dispute for arbitration and thus, an arbitrator may be appointed, as per the clause 24 and 25 of the contract in question.

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Clause 24 and 25 are reproduced as hereunder:

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“ 24. Disputes

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24.1 If the Contractor believes that a decision taken by the Engineer was either outside the authority given to the Engineer by the Employer or that the decision was wrongly taken, the decision shall be referred to the Adjudicator within 28 days of notification of the Engineer’s decision. Performance under the contract shall continue notwithstanding the reference to the Adjudicator, and payments by the Employer to the Contractor will not be withheld unless they are the subject matter of dispute. If the Contractor fails to refer the matter to the Adjudicator within the said period, the Employer will stand discharged from all the responsibility including financial claim from the Contractor.

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25. Procedure for Resolution of Disputes

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25.1 The Adjudicator shall give a decision in writing within 56 days of receipt of a notification of a dispute. The decision shall be a reasoned decision.

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25.2 The Adjudicator shall be paid daily at the rate specified in the Contract Data together with reimbursable expenses to the types specified in the Contract Data and the cost shall be divided equally between the Employer and the Contractor, whatever decision is reached by the Adjudicator. Either party may refer a decision of the Adjudicator to Arbitration within 28 days of the Adjudicator’s written decision. Arbitration shall be under the Arbitration and Conciliation Act, 1996. If neither party refers the dispute to Arbitration within the above 28 days, the Adjudicator’s decision will be final and binding on both the parties.

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25.3 Should the Adjudicator resign or die or be incapable, or should the Employer and the Contractor jointly agree

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(4 of 7)

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[ARBAP-16/2019]

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that the Adjudicator is not fulfilling his functions in accordance with the provisions of the Contract; a new Adjudicator will be jointly appointed by the Employer and the Contractor. In case of disagreement between the Employer and the Contractor, within 30 days of notification of such disagreement, the Adjudicator shall be designated by the appointing authority designated in the Contract Data, at the request of either party within 14 days of receipt of such request.

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25.4 Where the Initial Contract Price as mentioned in the Letter of Acceptance is more than Rs.10 Crore, the Arbitration, invoked in terms of Clause 25.2 shall be conducted in accordance with the following procedure:-

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(a) In case of a decision of the Adjudicator in a Dispute or difference arising between the Employer and a Contractor relating to any matter arising out of or connected with this Agreement, such disputes or differences shall be settled in accordance with the Arbitration and Conciliation Act 1996 and the matter will be referred to an Arbitral Tribunal. The Arbitral Tribunal shall consist of three Arbitrators, one each to be appointed by the Employer and the Contractor. The third Arbitrator shall be chosen by the two Arbitrators so appointed by the parties and shall act as 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 Chairman of the Executive Committee of the Indian Roads Congress.

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(b) If one of the parties fails to appoint its arbitrator in pursuance of sub-clause (a) above within 30 days after receipt of the notice of the appointment of its arbitrator by the other party, then the Chairman of the Executive Committee of Indian Roads Congress shall appoint the arbitrator.

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(c) A certified copy of the order of the Chairman of the Executive Committee of the Indian Roads Congress, making

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[ARBAP-16/2019]

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(5 of 7)

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such an appointment shall be furnished to each of the parties.

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(d) The decision of the majority of arbitrators shall be final and binding upon both the parties. The cost and expenses of Arbitration proceedings will 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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25.5 Where the Initial Contract Price as mentioned in the Letter of Acceptance is Rs.10 Crore and below, and Arbitration is invoked in terms of Clause 25.2, the matter will be referred to a sole Arbitrator. The Sole Arbitrator would be appointed by agreement between the parties; failing such agreement within 28 days of the reference to arbitration, by the appointing authority, namely, the Chairman of the Executive Committee of the Indian Roads Congress.

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25.6 Arbitration proceedings shall be held at a place mentioned in the Contract Data, and the language of the arbitration proceedings and that of all documents and communications between the parties shall be English.

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25.7 Performance under the contract shall continue even after reference to the arbitration and payments due to the contractor by the Employer shall not be withheld, unless they are the subject matter of the arbitration proceedings.”

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Learned counsel for the applicant further submitted that the contract in question has an existing arbitration clause as well as the application was filed within the period of limitation, and thus the same deserves to be allowed.

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On the other hand, the learned counsel for the respondents, while opposing the aforesaid submissions made on behalf of the applicant, submitted that the applicant has not acted in

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(6 of 7) [ARBAP-16/2019]

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accordance with the time limit and also not complied with the prerequisites, as provided under the contract in question.

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Learned counsel for the respondents further submitted that in the entire application, the applicant has not made any attempt to explain that the procedure prescribed, prior to invoking the arbitration clause, has been duly complied with.

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In support of his submissions, learned counsel for the respondents relied upon the order passed by a Coordinate Bench of this Hon’ble Court in the case of M/s Shree Ram & Co. Vs The Chief Engineer & Anr. (S.B. Arbitration Application No.6/2021 , decided on 09.12.2022).

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Learned counsel for the respondents also opposes the prayer made for appointment of the arbitrator on count of the fact that the applicant has deliberately caused delay in the present case and has not been able to resolve the dispute with the authorities of the respondent-Department.

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However, after making the aforesaid submissions, the parties jointly made a request that an independent arbitrator may be appointed as the sole Arbitrator to resolve the dispute in question between the parties.

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After hearing learned counsel for the parties, this Court finds that the limited issue in question falls within the ambit of Section 11 of the Arbitration and Conciliation Act, 1996.

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This Court is also conscious of the fact that any further issue(s) can be raised by either of the parties before the arbitrator,

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[ARBAP-16/2019]

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(7 of 7)

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who in turn, shall deal with the same, strictly in accordance with law.

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Accordingly, this Court finds that the agreement clause, relating to appointment of the Arbitrator, is required to be invoked and as such, the application, filed by the applicant, is allowed and while exercising the power conferred under Section 11 of the Act of 1996, appoints Hon’ble Shri Justice A.K. Mathur (Former Judge, Supreme Court of India)- Mobile No.98711- 13735– R/o “Raj Bhawan”, 784 - 5th Chopasani Road Sardarpura, Jodhpur, Pin-302003 (Rajasthan) , as the sole Arbitrator to adjudicate the dispute between the parties. The payment of cost of arbitration proceedings and arbitration fee shall be made as per the 4th Schedule appended to the Act of 1996.

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The intimation of appointment, as aforesaid, may be given by the counsel for the parties as well as by the Registry to Hon’ble Shri Justice A.K. Mathur. The above appointment is subject to necessary disclosure being made under Section 12 of the Act of 1996.

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(DR.PUSHPENDRA SINGH BHATI), J.

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SKant/-

Firm M/S Banshi Lal Vishnoi v. Chief Engineer, Public Works Department

Case brief

What is this about?

What did the court decide?

Firm M/S Banshi Lal Vishnoi v. Chief Engineer, Public Works Department

Case brief

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What did the court decide?

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