IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision : 31.3.2011 Arb. Case No. 29 of 2009 Gautam Builders ...Petitioner Versus The Chandigarh PEPSU Co-op. House Building Society ...Respondent CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA Present : Mr. Ashwinie Kumar Bansal, Advocate for the petitioner. Mr. Brijeshwar Singh, Advocate, for the respondent. HEMANT GUPTA, J. (ORAL) The Petitioner has sought appointment of an independent and impartial person as an Umpire in the present petition under Section 11 of the Arbitration and Conciliation Act, 1996. It is the case of the petitioner that respondent invited tenders for construction of 109 flats for its members on a plot at Sector 50-C, Chandigarh. Petitioner was awarded a contract for the construction of such flats at the total cost of Rs. 5,76,14,906.90 paise. The time for completion of the work was 24 months to be reckoned from the date of issue of allotment letter. Thus, the stipulated date of completion of construction was 31.3.2005. Petitioner is said to have completed the works but disputes arose between the parties in respect of such works. Such disputes which are sought to be settled by way of an Arbitration in terms of the Agreement between the parties. The relevant clauses 40.1 and 1(f) of the Agreement read as under: - Arb. Case No. 29 of 2008 40.1… In case of any dispute arising out of execution of this work, Items, Terms and conditions of the Contract, at first instance, it shall be decided by the Architects and Owner. In case of disagreement, the dispute shall b referred to arbitration. The panel of arbitrators shall comprise one person appointed by the Owner. One person appointed by the Contractor and third shall be the Architect. The provisions of Arbitration Act, 1940 and rules made thereunder shall apply to the arbitration proceedings. The decision of the Arbitrators shall be final and binding on both the parties. 1(f) …. The “Architect” mean M/s Design Axis, SCO 184, Sector 37-C, Chandigarh or in the event of his/their ceasing to be the Architects for the purpose of this contract such other person/s as the Employer shall nominate for the purpose. In terms of the above said term of the agreement, the Petitioner nominated Shri B.R. Bansal, retired District and Sessions Judge as its Arbitrator whereas respondent nominated Shri Rajeshwar Singh Thakur, Advocate as its Arbitrator. It is the case of the petitioner that a notice was sent to the Architect as defined in Clause 1 (f) of the General Condition i.e. M/s Design Axis, SCO 184, Sector 37-C, Chandigarh, a firm name of Shri Viresh Goel. The said notice was returned undelivered. It is pointed out that the said Architect was involved with the work and disputes between the parties. He has made various designs and was involved in the decisions and thus he is neither an independent and impartial Arbitrator nor eligible to be a presiding Arbitrator because of the specific role under various Clauses of the Agreement. It was also pleaded that the said firm is an individual and 2 Arb. Case No. 29 of 2008 has shifted from Chandigarh without proper address, therefore, a Umpire be appointed by this Court. In reply, on behalf of respondents, it is pointed out that the respondent is yet to appoint third Arbitrator (Umpire). Subsequently, the nominated Arbitrator has been retained by the respondent as its counsel. In para 9 of the reply, it is pointed out that M/s Design Axis, Architect was involved in drafting of contract Agreement and for taking the decision in the matter. Such firm was involved with the work and disputes between the parties, Architect has made various designs and decisions. The Architect was working with both the petitioner as well as the respondent to discharge his duties in free and fair manner. During the course of arguments, learned counsel for the petitioner has argued that though the Agreement contemplated three Member Arbitral Tribunal but this Court should appoint an Architect as a sole Arbitrator so that the entire dispute between the parties are resolved in free and fair manner. He has relied upon a judgment of this Court rendered in 2010(2)R.C.R (Civil) 34 Kurali Toll Bridge Co. Pvt. Ltd. vs State of Punjab and others, wherein it has been held to the following effect: - (10) ….In the present case, the tender was invited as early as in the year 1998. The allotment of work, however, came only in November 2003. the request for appointment of an Arbitrator was made in February, 2008 and the appointments made I April, 2008, no matter after the expiry of stipulated period of thirty days. There is, therefore, not much of a delay in the making of the appointment in comparison to what was the position in Singh Builder case (supra). All the same, if the respondents had forfeited their rights to nominate Arbitrator, the Court may have to appoint an Arbitrator in place of Sh. Amrit Inder Singh. In the absence of any compulsion to the contrary, the Court’s nominee will be a trained judicial mind to ensure objectivity and fairness in the process of adjudication. 3 Arb. Case No. 29 of 2008 If that be so, there would be two former Chief Justices as Arbitrators with Sh. V. Velayutham as a Presiding Arbitrator. That may not be a comfortable or enviable situation where the Presiding Officer is a a retired Engineer with two former Chief Justices as his co- Arbitrators. Having regard to all these circumstances, therefore, I am more inclined to make an appointment of a sole Arbitrator of impeccable integrity and outstanding ability. This would, in my opinion, not only ensure that there is no further delay in the constitution of the Arbitral Tribunal but reduce expense in arbitration proceedings. Expense in arbitration proceedings have off late become a subject of debate in different fora. The petitioner has completed the work on 18.3.2006. Respondent initially appointed Sh. Rajeshwar Singh Thakur, Advocate as its Arbitrator but Sh. Thakur is now appearing before this Court as the counsel for respondent. Mr. Thakur has pointed out that Mr. R.P. Bajaj, Additional District and Sessions Judge (Retd.) has been appointed as an Arbitrator to fill up the vacancy on account of earlier nominated Arbitrator on behalf of the respondent. It is also argued that Mr. Viresh Goel, representing M/s Design Axis has given his consent to act as an Arbitrator. Therefore, three-member Arbitral Tribunal has been constituted to adjudicate upon the disputes and that the petitioner is bound by it. After hearing learned counsel for the parties, I find that action of respondents in the manner to resolve the disputes is far from fair and reasonable. It appears that the respondent is taking conscious steps to delay the adjudication of the claim of the petitioner in a fair manner. Even though, the petitioner has nominated its Arbitrator on 12.8.2008, respondents earlier nominated Shri Thakur as its Arbitrator but later engaged him as an Advocate. Shri Goel has been named as a Umpire but as per the averments made in the written statement, he was 4 Arb. Case No. 29 of 2008 actively involved in the execution and also in disputes arising between the parties. Thus, it will not be fair for the respondents to appoint Shri Viresh Goel as an Umpire. Since, the dispute between the parties pertain to construction of houses, an independent and impartial Architect would be better and competent to decide the dispute between the parties which alone shall inspire confidence in the adjudication process. Consequently, Sh. Bachhitar Singh, B. Arch., Bachhitar Singh Associates, SCO No. 20, Sector 7-C, Madhya Marg, Chadigarh is appointed as a sole Arbitrator. Learned counsel for the parties, agree to pay Rs. 2,00,000/- each as fee of the Arbitrator apart from Rs. 50,000/- as the expenses of the proceedings. Disposed of. 31.3.2011 (HEMANT GUPTA) preeti JUDGE 5