IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision : 17.03.2011 Arb. Case No.24 of 2010 M/s Akash Enterprises ...Petitioner Versus The General Manager, Northern Railway and others ...Respondents CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA Present : Mr. S.K. Mahajan, Advocate, for the petitioner. Mr. Nitin Kumar, Advocate, for the respondents. HEMANT GUPTA, J. (ORAL) The petitioner has sought appointment of an Arbitrator to adjudicate upon the disputes/differences having arisen out of contract agreement dated 12.11.2007 regarding the work of ‘Manning of Un-manned L-xing No.C-35 at KM 494/13-14 and L-xing No.C-44 at KM 472/14-15 on SNL-ASR section under ADEN/ASR’. It is the case of the petitioner that tender of the petitioner being lowest was accepted on 05.08.2007 and in pursuance thereof an agreement has been executed between the parties on 12.11.2007 in respect of the above-cited work. The total cost of the work was Rs.44,00,520/-. It is pleaded that the respondent committed contractual default at every stage from the first date and thus, causing financial loss to the petitioner resulting into delay in execution of the work. The petitioner also challenges the deduction from the final bill of the petitioner. The petitioner raised a Arb. Case No.24 of 2010 dispute under four heads vide communication dated 28.05.2009 (Annexure A-4). The said letter is addressed to General Manager, Baroda House, Northern Railway, Delhi. The petitioner has also produced photocopy of the postal receipt, which shows that the registered letter was addressed to the General Manager, Northern Railway, New Delhi and sent on 30.05.2009. Under postal certificate, the copy of the said letter was also sent to the office of Senior Divisional Railway Manager, Northern Railways, Ferozepur Cantt. The present petition for appointment of an Arbitrator was filed in the month of February, 2010 and listed for hearing for the first time on 19.02.2010. In the reply filed on behalf of the respondents, it has been pointed out that the demand for appointment of an Arbitrator was not made to respondent No.1 vide letter dated 28.05.2009 and that no such letter has been received by the General Manager. It is, however, pointed out that the copy of letter dated 28.05.2009 was marked to respondent No.2 i.e. Divisional Rail Manager. The respondents have also attached a communication dated 23.03.2010 (Annexure R-1) to the effect that the communication from the petitioner regarding appointment of an Arbitrator has not been received, but the Arbitrator will be shortly appointed by the Railway. Learned counsel for the respondents has vehemently argued that in terms of Standard General Conditions of Contract for use in connection with Engineering Works (hereinafter to be referred as ‘the Conditions’), the communication in respect of demand of an Arbitrator is required to be submitted to the General Manager, Railways in terms of 2 Arb. Case No.24 of 2010 Clause 63 of the Agreement. Therefore, the petitioner having not submitted the request for appointment of an Arbitrator to the General Manager, the present petition for seeking appointment of an Arbitrator is not maintainable. Learned counsel for the respondents has further argued that since the letter was purportedly addressed to the General Manager, therefore, respondent No.2 to whom the letter was sent was under the impression that the General Manager shall appoint the Arbitrator. Having heard learned counsel for the parties, I do not find any merit in the stand of the respondents that the request for appointment of an Arbitrator was not addressed to the appropriate Officer. In the Conditions, Clauses 1(a) defines ‘Railway’ to mean the President of the Republic of India or the Administrative Officers of the Railway or of the Successor Railway authorized to deal with any matters which these presents are concerned on his behalf. Clause 1 (b) defines ‘General Manager’ to mean the Officer in-charge of the General Superintendence and Control of the Railway and shall also includes the successors of the Successor Railway. Clause 63 of the Agreement reads as under: “63. Matters finally determined by the Railway – All disputes and differences of any kind whatsoever arising out of or in connection with the contract, whether during the progress of the work or alter its completion and whether before or after the determination of the contract shall be referred by the contractor to the Railways and the Railway shall within 120 days after receipt of the Contractor’s representation make and notify decisions on all matters referred to by the contractor in writing provided that matters for which provision has been made in clauses 8(a), 18, 22(5), 39, 43 (2), 45(a), 55, 55-A (5), 57, 57A, 61(1), 61(2) and 62(1)(b) of General Conditions of Contract or in any clause of the Special Conditions of the Contract or in any clause of the Special Conditions of the Contract shall be deemed as ‘excepted matters’ and decisions 3 Arb. Case No.24 of 2010 of the Railway authority, thereon shall be final and binding on the contractor provided further that ‘excepted matters’ shall stand specifically excluded from the purview of the arbitrator clause and not be referred to arbitration.” The letter (Annexure A-4) has been addressed to the General Manager, Northern Railway. The petitioner has attached photocopy of the receipt of sending the registered letter, which shows that such letter was addressed to the General Manager, Northern Railway. There is presumption of receipt of the letter by the addressee in terms of Section 27 of the General Clauses Act, 1897. Still further the written-statement filed on behalf of the respondents acknowledges the receipt of such letter by respondent No.2. But neither the General Manager nor respondent No.2 i.e. Divisional Rail Manager has appointed an Arbitrator before the filing of the present petition. Therefore, in terms of judgment rendered by Hon’ble Supreme Court in Datar Switchgears Ltd. Vs. Tata Finance Ltd. & Another (2000) 8 SCC 151, the respondents are estopped to appoint an Arbitrator under Clause 64 of the Agreement. Later in Union of India v. Bharat Battery Mfg. Co. (P) Ltd.,(2007) 7 SCC 684, the Hon’ble Supreme Court held: “9. We are unable to countenance the submission of the learned counsel for the appellant. Section 11(8) of the Act could have come to the aid of the appellant had the appellant appointed the arbitrator within 30 days from the date of receipt of request to do so from the respondent or the extended time, as the case may be. In the present case, as noticed above, Section 11(6) petition was filed on 30-3-2006 by the respondent. The appellant stated to have appointed one Dr. Gita Rawat on 15-5-2006 i.e. after Section 11(6) petition was filed by the respondent on 30-3-2006, which is not permissible in law. In other words, the appellants are stopped from making an appointment of the arbitrator in terms of Clause 24 of the agreement after Section 11(6) petition is filed by the respondent. Once Section 11(6) petition is filed before the court, seeking appointment of an arbitrator, the 4 Arb. Case No.24 of 2010 power to appoint an arbitrator in terms of arbitration clause of the agreement ceases.” Learned counsel for the respondents has lastly argued that in terms of Clause 64 (3)(a), the Arbitrator has to be the General Manager or a Gazetted Officer of Railway, therefore, in terms of Section 11(8) of the Act, the Arbitrator is required to be appointed having due regard to the terms and conditions of the Agreement executed between the parties. The respondents have failed to appoint an Arbitrator after the petitioner raised the demand for appointment of an Arbitrator. The Agreement does not contemplate any special qualification for appointment of an Arbitrator, who is to determine the disputes between the parties. Since there is no such qualification mentioned in the Agreement and the fact that respondents have failed to appoint an Arbitrator for the last 2 years, the interest of justice warrants that an Arbitrator is appointed by this Court. Thus, Shri B.S.Bedi, District Judge (Retd.), resident of 2826, Phase-VI, Mohali is appointed as an Arbitrator to adjudicate upon all the disputes arising between the parties. The Arbitrator shall fix his fee in consultation with the parties on the first date of hearing. 17.03.2011 (HEMANT GUPTA) Vimal JUDGE 5