IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH -.- Arbitration Case No. 142 of 2008 Date of Decision:- 27.4.2009. M/s Zoom Developers Pvt. Ltd. .... Petitioner. Versus State of Haryana & Ors. .... Respondent CORAM:- HON'BLE MR. JUSTICE HEMANT GUPTA. Present:- Mr. M.P.S.Mann, Advocate, for the petitioner. Mr. J.S.Chandail, Addl. A.G., Haryana. Hemant Gupta, J (Oral). The petitioner has sought appointment of an Arbitrator in respect of disputes arising out of the agreement dated 20.1.2006 for the construction of various building components in District Jail Kurukshetra. The petitioner was successful bidder in pursuance of tender of construction of various building components in District Jail Kurukshetra. The petitioner was allotted work on 20.1.2006. The approximate cost of the project was Rs.130.71 lac. The work was to be completed within a period of one year i.e. by 19.1.2007. Vide communication dated 17.1.2007 Annexure P-18, the petitioner was informed that petitioner has not completed the work and therefore, the Clause 3 of the contact agreement was invoked. Petitioner was informed that the further work would be got completed by the department at the risk and cost of the petitioner. The petitioner was advised to contact the Sub Divisional Engineer Provincial Sub Division No.II, Pehowa at Kurukshetra to get final measurements recorded for the Arbitration Case No. 142 of 2008 -2- work done in the presence of the petitioner by 29.1.2007 failing which the Sub Divisional Engineer will record measurements of the work done at his level for further action by the department. In pursuance of said communication, the petitioner asserted on 9.2.2009 that it was on account of persistance indefatigable efforts reflecting bona fide on petitioner's part that they have completed 15% of the project work and that a representative was present on 31.1.2007 for aiding final measurements of the work completed at site. The petitioner asserted that there is no cause of action against them warranting invocation of Clause -3 of the contract agreement. Vide Annexure P-21 dated 31.3.2007, the petitioner was informed that tenders for balance work has been called which is to be got done at the risk and cost of the petitioner. The details of balance quantities to be executed at the risk and cost of petitioner was communicated along with the letter dated 31.3.2007. It was thereafter on 23.4.2007 vide Annexure P-22 the petitioner sought amicable settlement as per clause 25(A)(1) of the agreement. On 21.12.2007, the petitioner communicated to Engineer-in-chief to refer the dispute for adjudication by suitable Arbitrator as provided by contract agreement dated 20.1.2006. Since the Arbitrator was not appointed within 30 days, the petitioner invoked the jurisdiction of this Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act'). Clause 25 (A) of the agreement reads as under:- "Clause 25 A:- If any dispute or difference of any kind whatsoever shall arise between the Government of Haryana/his authorized agent and the contractor in connection with or arising Arbitration Case No. 142 of 2008 -3- out of the contract, or the execution of the work that is (i) whether before its commencement or during the process of the work or after his completion, (2) and whether before or after the termination, abandonment or breach of the contract, it shall, in the first instance be referred to for being settled by the Executive Engineer-in-charge of the work at the time and he shall within a period of sixty days after being requested in writing by the contractor to do so, convey his decision to the contractor, and subject to arbitration as here-in-after provided, such decision in respect of every matter so referred, shall be final and binding upon the contractor. In case of work is already in progress, the contractor will proceed with the execution of the work on receipt of the decision by the Executive Engineer-incharge as aforesaid, with all the due diligence whether he or the Governor of Haryana/his authorized agent required arbitration as hereinafter provided or not. If the Executive Engineer-incharge of the work has conveyed his decision to the contractor and no claim to arbitration has been filed with him by the contractor within a period of sixty days from the receipt of letter communicating the decision, the said decision shall be final and binding upon the contractor and will not be a subject matter of arbitration at all if the Executive Engineer-incharge of the work fails to convey his decision with a period of sixty days, after being requested, as aforesaid, the contractor may, within further sixty days of the expiry of first sixty days from the date on which request has been Arbitration Case No. 142 of 2008 -4- made to the Executive Engieer-incharge request the Engineer-in- Chief that the matters in dispute be referred to arbitration as hereinafter provided." On behalf of the respondents, it has been argued that in terms of Clause 25 (A) of the agreement, the petitioner had sought settlement of dispute vide communication dated 23.4.2007. But the request for appointment of Arbitrator has been made on 21.12.2007 i.e. much after the expiry of 120 days as provided in cluase 25 (A). Thus, the petitioner has lost its right to get the matter adjudicated by an arbitrator. Learned counsel for the petitioner has vehemently argued that after the contract agreement was terminated on 17.1.2007, the petitioner has disputed the right of the respondent to terminate vide communication dated 9.2.2007, Annexure P-20. Thereafter, the petitioner was informed on 31.3.2007 of tender for the remaining work at the risk and cost of petitioner. The Executive Engineer has not responded or even referred to the communication dated 9.2.2007 in its communication Annexure P-21, dated 31.3.2007. Vide communication dated 9.2.2007, the petitioner has offered for settlement of dispute by an Executive Engineer. Such communication is in terms of first part of Clause 25(A) of the agreement. Therefore, the communication Annexure P-22 dated 23.4.2007 is to be treated as a request for appointment of an arbitrator as per the second part of the clause 25(A) of the agreement. A fact that it was not addressed of the Chief Engineer would be a case of irregularity not effecting the right of the petitioner to seek an appointment of the arbitrator. Alternatively, it was argued that if Annexure P-22 is to be treated as a request for settlement of a Arbitration Case No. 142 of 2008 -5- dispute in terms of first part of the Clause 25(A) of the agreement, the facts of the case disclose sufficient cause for extension of time in terms of Section 43 of the Act for appointment of the Arbitrator. Therefore, the dispute between the parties should be referred for adjudication by an arbitrator in terms of agreement between the parties rather than non-suiting the petitioner on technicalities. I have heard learned counsel for the parties at some length and am of the opinion that the dispute between the parties should be adjudicated upon by an arbitrator in terms of clause 25 (A) of the agreement. Annexure P-20 dated 9.2.2007 can not be treated as a request for settlement of dispute by Executive Engineer in terms of Clause 25 (A) of the agreement. In fact, it is Annexure P-22 which satisfies the requirement of first part of clause 25 (A) of the agreement. It is in this letter the Executive Enigneer has been called upon for amicable settlement. Since the Executive Enigneer has not responded to the said communication within 60 days, it was obligatory on the part of the petitioner to request Engineer-in-Chief for appointment of an arbitrator within the next 60 days i.e. within 120 days of letter dated 23.4.2007 i.e on or about 27.8.2007. However, the petitioner has requested for appointment an arbitrator on 21.12.2007 i.e after the delay of about 90 days. Section 43 (3) of the Act contemplates that where an arbitration agreement to submit further disputes to arbitration provides that any claim to which the agreement applies shall be barred unless some step to commence arbitral proceedings is taken within a time fixed by the agreement and a dispute arises to which agreement applies the Court, if it is Arbitration Case No. 142 of 2008 -6- of the opinion that in the circumstances of the case undue hardship would otherwise be caused, and notwithstanding that the time so fixed has expired, may on such terms, if any, as the justice of the case may require, extend the time for such period as it thinks proper. A perusal of the record shows that the petitioner has disputed in various communications that there was no delay in completion of the contract on its part. The petitioner has attached communications even before the communication dated 17.1.2007 addressed by the Executive Engineer terminating the contract was received by the petitioner. Thereafter, the petitioner has addressed communication denying right of the respondent to terminate the contract and to get the contract executed at the risk and cost of the petitioner. The inaction of the Executive Engineer in communicating any decision on the request of the petitioner made on 9.2.2007 and 23.4.2007 cannot absolve the respondents. The duty to act fairly is on the respondents as well. Since the dispute between the parties arose even before the termination of the contract on 17.1.2007 the petitioner should not be made remedyless. Delay of three months in requesting Engineer-in-Chief to appoint an arbitrator is thus liable to be condoned. Sub-clause 2 of the Clause 25(A) provides that disputes are required to be referred for adjudication by serving Superintendent Haryana or Chief Engineer to be nominated by Engineer PWD B&R. The dispute between the parties is whether there are reasonable and justifiable grounds in not completing the contract within the period prescribed. There is no dispute regarding measurements or other technical aspect. Such issue can be adjudicated upon impartially by a legally trained mind. Arbitration Case No. 142 of 2008 -7- Therefore, Hon'ble Justice Ms. Kiran Anand Lal, former Judge of this Court, is appointed as an arbitrator. The Arbitrator is free to fix his fee in consultation with parties. April 27, 2009 (Hemant Gupta) tripti Judge