1 HIGH COURT OF MADHYA PRADESH BENCH AT INDORE (SB: HON. SHRI JUSTICE PRAKASH SHRIVASTAVA) A.C. No.11/2009 M/s Karan Development Services Pvt. Ltd. C-21, Inder Nagar, Tansen Road, Gwalior. .... Applicant Vs. Union of India and one Another. .... Respondents ------------------------------------------------------------------------------------ Shri D.M. Kulkarni, learned counsel for the applicant. Shri H.Y. Mehta, learned counsel for the respondents. ------------------------------------------------------------------------------------ Whether approved for reporting : ORDER (Passed on 19.9.2011) 1/ This arbitration case has been filed under Section 11(6) of the Arbitration & Conciliation Act, 1996 for appointment of independent arbitrator. 2/ The case of the applicant is that he was awarded contract by the respondents under Tender No.MBD/4-B/11/R.1 for construction of road etc. and contra agreement No.MBD/4- B/15 dated 7.5.1999 was executed. It is alleged that due to the reasons attributable to the respondents, the work could not be completed within the stipulated time. The applicant had applied for extension of time on 7.12.1999 but the Dy. Chief Engineer (S & C) Western Railway, Ratlam, had unilaterally rescinded the contract, vide letter dated 13.12.1999 and the recovery was 2 initiated against the applicant. The applicant submitted the application dated 7.9.2000 to the Chief Administrative Officer (CAO), Western Railway, Mumbai under Clause 63 of the General Conditions of Contract. The CAO did not give his decision within the stipulated period of 90 days, therefore, the applicant submitted application dated 2.2.2001 to the General Manager, Western Railway, Mumbai, after the expiry of 90 days but before 180 days as per the provisions contained in Clause 64(1)(i) of GCC, but no action was taken. Therefore, the applicant submitted the application under Section 8 and 11 of the Arbitration and Conciliation Act, 1996 to the District Judge, Shajapur, which was rejected, vide order dated 21.1.2002, against which the applicant had preferred Writ Petition No.1769/2002 before this Court, which was allowed by the Division Bench of this Court by order dated 7.5.2009. In view of the decision in the connected matter, wherein it was held that after the judgment of the Supreme Court in the matter of S.B.P. & Co. Vs. Patel Engineering Ltd. reported in 2005(8) SCC 618, the District Judge had no jurisdiction to entertain and decide the application under Section 11(6). The Division Bench while setting aside the order of the learned District Judge granted liberty to the petitioner to apply afresh before the nominee judge. The applicant, therefore, filed the present application on 6.7.2009. 3/ The application has been opposed by the respondents on the ground that in terms of Clause 41.2 of the special conditions of the contract the claim including with interest being more than 20% of the contract amount, the 3 arbitration clause is not attracted. Further objection has been taken that the application is barred in view of Clause 63 and 64 of the general conditions since the applicant did not take steps in time. 4/ I have heard the learned counsel for the parties and perused the record. 5/ So far as the first objection in respect of the claim being in excess of the value mentioned in Clause 41.2 of the Contract is concerned, it is noticed that the value of the claim, which was submitted by the applicant to the respondents, vide Annexure P/5 excluding the claim of interest, is less than 20% of the value of the contract. The interest on the said claim is to be ascertained in the arbitration proceedings. Even otherwise, the Supreme Court in the matter of S.B.P. & Co. (supra) has held that :- “39. It is necessary to define what exactly the Chief Justice, approached with an application under Section 11 of the Act, is to decide at that stage. Obviously, he has to decide his own jurisdiction in the sense whether the party making the motion has approached the right High Court. He has to decide whether there is an arbitration agreement, as defined in the Act and whether the person who has made the request before him, is a party to such an agreement. It is necessary to indicate that he can also decide the question whether the claim was a dead one; or a long-barred claim that was sought to be resurrected and whether the parties have concluded the transaction by recording satisfaction of their mutual rights and obligations or by receiving the final payment without objection. It may not be possible at that stage, to decide whether a live claim made, is one which comes within the purview 4 of the arbitration clause. It will be appropriate to leave that question to be decided by the Arbitral Tribunal on taking evidence, along with the merits of the claims involved in the arbitration. The Chief Justice has to decide whether the applicant has satisfied the conditions for appointing an arbitrator under Section 11(6) of the Act. For the purpose of taking a decision on these aspects, the Chief Justice can either proceed on the basis of affidavits and the documents produced or take such evidence or get such evidence recorded, as may be necessary. We think that adoption of this procedure in the context of the Act would best serve the purpose sought to be achieved by the Act of expediting the process of arbitration, without too many approaches to the court at various stages of the proceedings before the Arbitral Tribunal. 6/ Therefore, in terms of the aforesaid, it is found just and proper to leave the question of falling of the claim of the applicant within the purview of the arbitration clause, for decision by the arbitrator. 7/ In this regard learned counsel for the respondents has relied upon the order of this Court in the matter of O.P. Sharma Vs. Union of India and others dated 13.10.2005 passed in Civil Revision No.431/2004 but the said order is of no help to him since in that case the dispute involved was found to be of a value of more than 20% of the contracted sum, and even otherwise the said order was passed prior to the judgment of the Supreme Court in the matter of S.B.P. & Co. (supra). 8/ The next objection of the counsel for the respondents is that the arbitrator can not be appointed in view of the fact that the applicant did not take steps within time in terms of Clause 63 & 64 of the General Conditions of Contract. 5 The applicant in this regard has taken the stand that the contract was illegally terminated on 13.12.1999. The applicant had submitted application for making the reference under Clause 63 of General Conditions of the Contract before the Chief Administrative Officer, Mumbai on 7.9.2000 but the C.A.O. did not give any decision within the prescribed time, therefore, the applicant had submitted the application for appointment of arbitrator under Section 64 of the General Conditions of the Contract on 2.2.2001 to the General Manager, Western Railway, Mumbai, as per the provisions of agreement which should have been disposed of by General Manager up to 2.4.2001, but no action was taken, therefore, the cause of action arose on 3.4.2001 and is continuing thereafter. The applicant's case is that these applications were submitted to the C.A.O. and the General Manager within limitation as per provisions contained in the Limitation Act, 1963 read with Section 21 and 43 of the Arbitration and Conciliation Act, 1996. 9/ It is also worth noting that the issue of limitation raised by the respondents requires leading of evidence by both the parties, therefore, it is found just and proper to leave the said issue open for decision by the arbitrator, if raised by the respondents. At this stage the applicant's prayer for appointment of the arbitrator can not be rejected since the claim is not found to be a dead claim and it has been found that the agreement contains the arbitration clause and the parties before this Court are parties to the agreement. 10/ Keeping in view the fact that the appellant had earlier approached the Chief Administrative Officer and 6 General Manager of the respondent for settling the dispute but the same has been proved to be futile and also the fact that the appellant is trying since the year 2000 for settling the dispute through arbitration and also keeping in view the judgment of the Supreme Court in the matter of Northern Railway Administration Vs. Patel Engineering Co reported in (2008)10 SCC 240 and Union of India Vs. Singh Builders Syndicate reported in (2009)4 SCC 523, I deem it proper to appoint an independent arbitrator in the matter. 11/ The conditions for appointment of arbitrator in the present case are fulfilled, therefore, by allowing this application, Hon.Mr.Justice S.P.Khare (Retired), R/o.A-1, 202, Shehnai Residency, A.B.Road, Indore is appointed as arbitrator. The parties are directed to appear before the arbitrator on 30/09/2011. (PRAKASH SHRIVASTAVA) J u d g e Trilok.