IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.T.SANKARAN MONDAY, THE 17TH JANUARY 2011 / 27TH POUSHA 1932 AR.No. 62 of 2010() ------------------- PETITIONER: -------------------- M/S.FINS ENGINEERS & CONTRACTORS PVT. LTD., N.P.TOWERS POONKUNNAM ROAD, WEST FORT, THRISSUR, REPRESENTED BY ITS MANAGING DIRECTOR P.N.SURESH. BY ADV. SRI.V.RAJENDRAN RESPONDENT(S): --------------- 1. THRISSUR DISTRICT CO-OPERATIVE BANK LTD. SAHAKARANA SATHABDI MANDIRAM, THRISSUR, REPRESENTED BY ITS GENERAL MANAGER. 2. REGISTRAR OF CO-OPERATIVE SOCIETIES, THIRUVANANTHAPURAM. ADV. SRI.P.C.SASIDHARAN FOR R-1 THIS ARBITRATION REQUEST HAVING BEEN FINALLY HEARD ON 17/01/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K.T.SANKARAN, J. ----------------------------------------------- Arbitration Request No.62 of 2010 ------------------------------------------------ Dated this the 17th day of January, 2011 O R D E R The petitioner entered into Annexure A1 and Annexure A2 agreements with the first respondent by which the petitioner undertook to execute the civil works and electrification works of the Thrissur District Co-operative Bank Ltd. The terms and conditions were set out in the agreements. 2. According to the petitioner, the work was completed as per the terms of the agreements. There is dispute on this aspect and according to the first respondent, the work was not satisfactorily completed and the site handed over as per the terms of the agreements. 3. Disputes arose between the parties. According to the petitioner, as per Annexure A1 agreement, a sum of ` A.R.No.62/2010 2 6,25,60,895/- was due towards which, on the claim made by the petitioner, only a part payment of ` 5,23,77,441/- was released by the first respondent. It is also stated by the petitioner that as per Annexure A2 agreement, a sum of ` 1,12,54,946/- was due towards which, on the claim made by the petitioner, only a part payment of ` 92,07,732/- was released by the first respondent. Accordingly, the petitioner claims that the balance amounts of ` 1,01,83,454/- and ` 20,47,207/- were withheld without any justifiable reason. 4. The petitioner sent Annexure A4 and Annexure A5 notices dated 23rd September, 2010 to the first respondent requesting for disbursement of the amount. In case the first respondent was not willing to pay the amount, it was requested in Annexures A4 and A5 notices that an arbitrator may be appointed in terms of the arbitration clause. The first respondent replied in Annexure A6 and Annexure A7 letters that the additional work was not done on the basis of any A.R.No.62/2010 3 written consent or permission from the Bank and therefore, the dispute relating to the same could be adjudicated only under Section 69 of the Kerala Co-operative Societies Act. 5. In the counter affidavit filed by the first respondent, the same stand has been taken as in the reply notice. 6. Annexure A2(a) General Conditions of Contract were made applicable to Annexure A1 and Annexure A2 agreements. Clause 31 in Annexure A2(a) contains the arbitration clause, which reads as follows: “31. Arbitration All disputes or differences of any kind whatsoever which shall any time arise between the parties hereto touching or concerning the works or the execution of maintenance thereof of this contract or the rights touching or concerning the works or the execution of maintenance thereof of this contract or the construction remaining operation or effect thereof or to the rights of liabilities of the parties or arising out of or in relation thereto A.R.No.62/2010 4 whether during or after determination, force closure or branch of the contract (other than those in respect of which the decision of any person is by the contract expresses to be final and binding) shall after written notice by either party to the contract to the other of them and to the Employer hereinafter mentioned be referred for adjudication to a sole Arbitrator to be appointed as hereinafter provided. For the purpose of appointing the sole Arbitrator referred to above, the Employer will send within thirty days of receipt of the notice, to the contractor a panel of three names of persons who shall be presently unconnected with organisation for which the work is executed. The contractor shall on receipt of the names as aforesaid, select any one of the persons named to appoint as a sole arbitrator and communicate his name to the Employer within thirty days of receipt of the names. The Employer shall thereupon without any delay appoint the said person as the sole Arbitrator. If the contractor fails to communicate such selection as provided above within the period specified, the competent authority should make the selection and appoint the selected person as the Sole Arbitrator. A.R.No.62/2010 5 If the Employer fails to send to the contractor the panel of three names as aforesaid within the period specified, the contractor shall send to the Employer a panel of three names of persons who shall all be unconnected with either party. The Employer shall on receipt of the names as aforesaid select any one of the persons named and appoint him as aforesaid select any one of the persons named and appoint him as the Sole Arbitrator. If the Employer fails to select the person and appoint him as the Sole Arbitrator within 30 days of receipt of the panel and inform the contractor accordingly, the Contractor shall be entitled to one of the persons from the panel as the Sole Arbitrator accordingly, the Contractor shall be entitled to appoint one of the persons from the panel as the Sole Arbitrator and communicate his name to the Employer. If the Arbitrator so appointed is unable or unwilling to act or resigns his appointment or vacates his office due to any reason whatsoever another Sole Arbitrator shall be appointed as aforesaid. The work under the Contract shall, however, continue during the arbitration proceedings and no payment due or payable to the contractor shall be withheld on account of A.R.No.62/2010 6 such proceedings. The Arbitrator may from time to time, with the consent of the parties, enlarge the time for making and publishing the award. The arbitrator shall give a separate award in respect of each dispute or difference referred to him. The arbitrator shall decide each dispute in accordance with the terms of the contract and give a reasoned award. The venue of arbitration shall be such place as may be fixed by the arbitrator is his sole discretion. The fees, if any, of the Arbitrator shall, if required to be paid before the award is made and published, be paid half and half by each of the parties. The costs of the reference and of the award including the fees, if any, of the Arbitrator who may direct to and by when and in what manner, such costs or any part thereof shall be paid and may fix or settle and amount of costs to be so paid. The award of Arbitrator shall be final and binding on both the parties. Subject to aforesaid the provisions of the Arbitrator Act 1940 or any statutory modification or re-enactment thereof and the rules made there under, and for the time being in force, shall apply to the arbitration proceeding under this A.R.No.62/2010 7 clause. The Employer and the contractor hereby also agree that arbitration under clause shall be a condition precedent to any right to action under the contract with regard to the matters hereby expressly agreed to be so referred to arbitration.” 7. Since the first respondent has not sent the panel of three arbitrators as provided in the arbitration clause, the petitioner has approached this Court under Section 11 of the Arbitration and Conciliation Act to appoint an arbitrator. 8. The learned counsel for the petitioner submitted that a similar contention, which was taken by the first respondent, was taken in A.R.No.45 of 2008 and it was negatived by a learned Single Judge of this Court. In A.R.No.45 of 2008, it was held as follows : “7. Even if it is accepted that the Bank has got the work of the auditorium executed without obtaining sanction of the Registrar of Co- A.R.No.62/2010 8 operative Societies or the Government, that may be a lapse on the part of the Bank or its officials. But that will not exonerate the Bank from its liability to settle the bills of the applicant. Therefore, so long as the applicant's bills remain unpaid, and as the Bank is disputing its liability to pay the amount due to the applicant, there exists an arbitrable dispute between the parties, and for the resolution of which the applicant is entitled to seek the appointment of an Arbitrator as provided in Clause 8 of Annexure A1.” 9. I am also of the view that though the additional work was not sanctioned by the Registrar of Co-operative Societies or by the Government, that is not a ground for holding that the arbitration could be only as provided under Section 69 of the Kerala Co-operative Societies Act. The parties have entered into Annexure A1 and A2 agreements. They did not choose to make a specific provision in that regard. On the other hand, a procedure was agreed upon and a detailed procedure is mentioned in the arbitration clause. Any possible dispute or difference of opinion between the A.R.No.62/2010 9 parties would come within the purview of that arbitration clause and Section 69 of the Kerala Co-operative Societies Act would not apply in such circumstances. 10. Accordingly, I am of the view that the Arbitration Request is liable to be allowed. The learned counsel appearing for the parties agreed that Sri.K.Ramachandran, Advocate (Retired District Judge), may be appointed as the arbitrator. Accordingly, Sri.K.Ramachandran, Advocate (Retired District Judge), Govind, Neduvelil Line, Ravipuram Road, Ernakulam, is appointed as the arbitrator. The arbitrator would be free to fix his fee. The Arbitration Request is allowed as above. K.T.SANKARAN JUDGE csl