1 S.B. Arbitration Application No.59/2007 M/s. Indeera Builders (petitioner) Ltd. vs Union of India & Ors DATE OF ORDER: 19.5.2009 HON'BLE MR. PRAKASH TATIA, J. Mr. SD Vyas, for the petitioner. Mr. Kamal Dave, for the respondents. . <><><> Heard learned counsel for the parties. The contract was entered into between the applicant and Union of India through Chief Engineer (Construction) North Western Railway, Jaipur on 23.9.2004. By this contract, the petitioner was given some work contract and the period of the contract was 11 months and the work was to be completed by 14th June, 2005. According to the petitioner due to the fault of the respondent-Railway Department and circumstances beyond the control of the petitioner, the work period was sought to be extended upto Dec., 2005, but it was extended only upto 14.8.2005. According tot he petitioner, he was in process of completing the work, but the contract was terminated on 5th July, 2005 pre-maturely and, therefore,, the petitioner suffered loss. The petitioner alleged that the termination of the contract was absolutely illegal and it should not have been terminated at the fag end of the completion of the work. Be it as it may be, 2 the dispute arises between the parties as petitioner has sought claims referred in this petition. The petitioner requested the respondent to appoint the arbitrator by serving a notice vide letters dated 9th Sept., 2005, 30th Dec., 2005 and 16th Jan., 2006. The respondent refused to appoint the arbitrator by communication dated 21.3.2006, copy of which has been placed on record as Annex.C. The respondent refused to appoint the arbitrator on the ground that the respondents examined the claim of the petitioner and found that most of the claims covered under excepted matters as described in clause No.63 of the General Conditions of Contract. Apart from above, it has been stated that the petitioner left the work incomplete and this work was terminated at petitioner's risk and cost, therefore, earnest money of Rs.50,000/- and security deposit of Rs.2.50 lacs were forfeited as per clause no.16 of the General Conditions of Contract. It is also stated that there is no price escalation clause in this contract, thus your claim no.6 is also beyond the scope of contract. It is also stated that petitioner failed to execute the work in stipulated time period, thus, the balance work was executed from other agency at the risk and cost of the petitioner including liability for the petitioner of Rs.14,18,992/-. Learned counsel for the petitioner submits that there is no dispute that there is arbitration clause and whether the claim falls under the excepted matters is concerned, that also can be 3 decided by the arbitrator and when respondent themselves stated that “most of the claims cover under excepted matters” then admittedly, there are other claims of the petitioner which were raised before the respondent were not the claims falling under the “excepted matters”. It is submitted that petitioner is disputing the respondent's contention that any of the matter is falling under the “excepted matters” and, therefore, cannot be referred to arbitrator. It is also submitted that instead of referring the dispute to the arbitrator, it appears that respondents themselves had decided the dispute which they could not have decided. Learned counsel for the respondent submitted that the “excepted matters” cannot be referred to the arbitrator in view of clause 63 of the General Conditions of the Contract. It is submitted that even if any arbitrator is appointed then that is required to be appointed as per clause 64(3)(a)(iii), which provides that no person other than a gazetted Railway Officer should act as an Arbitrator/Umpire and if for any reason, that is not possible, the matter is not to be referred to arbitration at all. Therefore, only a gazetted Railway Officer can be appointed as arbitrator. I considered the submissions of learned counsel for the parties and perused the facts of the case. From communication sent by the respondent to the 4 petitioner dated 21.3.2006 even it is clear that there is no dispute that there is arbitration clause in the contract. Even as per the respondents there are some of the claims which are not covered under the alleged “excepted matters” so as to deny the appointment of arbitrator. It is disputed by the petitioner that any of the claim falls in the category of “excepted matters” and whether all claim is falling in the said category of “excepted matters” can also be decided by the arbitrator. It appears that respondents by communication dated 21.3.2006 have decided some of the core issue for which petitioner prayed for appointment of arbitrator that clearly demonstrate that there is dispute between the parties in the matter where by the contract provides for settlement of dispute by the arbitral proceedings. Since the respondents failed to appoint the arbitrator within time, therefore, this petition is allowed and the respondents are directed to appoint the arbitrator within a period of two months from today by keeping in mind clause 64(3)(a)(iii) of the General Conditions of Contract Regulations and Instructions for Tenders and Standard Forms of Contract and the arbitrator shall decide the matter expeditiously. (PRAKASH TATIA), J. c.p.goyal/-