S.B.Civil Misc. (Arbitration) Application No.70/07 M/s Chetak Travelling Agency v. Rajasthan State Mines & Minerals Ltd. & anr. 1 IN THE HIGH COURT OF JUDICATUARE FOR RAJASTHAN AT JODHPUR. ORDER M/s Chetak Travelling vs. Rajasthan State Mines Agency & Minerals Ltd. & anr. S.B. Civil Misc. (Arbitration) Application No.70/2007 under Section 10 and 11 of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator. Date of Order: December 19th, 2008. PRESENT HON'BLE MR. PRAKASH TATIA, J. Ms. Rekha Borana for the applicant. Mr. M.R. Singhvi for the respondents. REPORTABLE BY THE COURT: This application under Sections 10 and 11 of the Arbitration and Conciliation Act, 1996 (for short 'the Actof 1996') has been filed by the applicant M/s Chetak Travelling Agency against the non-applicant Rajasthan State Mines & Minerals Ltd. and its General Manager. According to the facts alleged by the applicant, the respondent-department invited tender vide its notice inviting S.B.Civil Misc. (Arbitration) Application No.70/07 M/s Chetak Travelling Agency v. Rajasthan State Mines & Minerals Ltd. & anr. 2 tender No. RSMM/CO/GM(C)/CONT.2/2003 dated 20.9.2003 dated 20.9.2003 for the work of carrying on its workers to the mines from their residences and then dropped back to the residences from the mines. In response to the notice inviting tender of the respondent- department, the applicant firm submitted its rates and the rates of the firm was found lowest and, therefore, the applicant-firm's tender was accepted and the work order No. RSMM/CO/GM(C)/ CONT.2/2003/705 dated 15.12.2003 was issued on 15.12.2003. Copy of the work order to the applicant was granted for three years commencing from 1.12.2003 to 30.11.2006. Under the contract, the applicant was supposed to provide Deluxe buses for the work which is required to be done on pre-decided routes. It is submitted that to perform the work in terms of the work order, the applicant-firm took loans from various banks and financial institutions for the purchase of new buses and the firm started the work on the stipulated date and continued to perform the work, which according the applicant, was to the satisfaction of the non- applicant. The applicant-firm received a notice dated 25.3.2005 from respondent no.2 in terms of Clause 18 of the work order seeking explanation of the firm within a period of 72 hours as to why the contract entered into between the parties be not terminated S.B.Civil Misc. (Arbitration) Application No.70/07 M/s Chetak Travelling Agency v. Rajasthan State Mines & Minerals Ltd. & anr. 3 because of the reasons given in the notice. That notice was replied by the applicant-firm on the same day, i.e. 25.3.2005 regretting for the unfortunate incidents and stating that all the alternative arrangements as required to be done on the part of the firm have been made. Copy of the notice received by it from respondent no.2 and its reply Annex. 2 and 3 both are dated 25.3.2005. However, the applicant's said contract was terminated in terms of Clause 18 of the work order dated 15.12.2005 w.e.f. third shift of 19.6.2005. According to the applicant, the contract could have been terminated only by giving notice of 30 days in writing to the contractor whereas only 2 days' notice was given to the applicant and, therefore, that notice was illegal and void. According to the applicant, the applicant-firm suffered following losses on account of (illegal) termination of the contract by the respondent-department:- i. Amount deposited towards security Deposit Rs. 6,00,000/- ii. Amount due for the month of April & May, 05 Rs. 15,00,000/- iii. Amount due towards extra work done (about 1.5 lakh kilometers extra) Rs. 19,65,000/- iv. Amount deducted from previous bills Rs. 3,00,000/- ---------------------- Total Rs. 43,65,000/- ---------------------- In addition to above, according to the applicant, the S.B.Civil Misc. (Arbitration) Application No.70/07 M/s Chetak Travelling Agency v. Rajasthan State Mines & Minerals Ltd. & anr. 4 applicant suffered loss in total Rs,1,26,00,000/- which the applicant could have earned had the contract been not illegally terminated by the department before 17 months remaining in the stipulated period of contract. It will be worthwhile to mention here that the applicant itself filed a civil suit for permanent injunction on 18.6.2005. The said suit was dismissed by the court of Civil Judge (Jr.Div.) vide judgment and decree dated 5.2.2007. The applicant-firm thereafter is seeking to invoke Clause 28 of the agreement wherein it is provided that all disputes between the parties in relation to the contract shall be referred to the arbitrator as per the provisions of the Act of 1996. The Managing Director of the Company shall be the authority for appointing the arbitrator and the venue of the arbitration shall be Udaipur City only. The applicant-firm before filing this petition,served notice upon the respondent which is dated 14.9.2006 and prayed for appointing an independent arbitrator for resolution of dispute arising out of contract between the parties. The respondents replied to the notice of the applicant vide communication dated S.B.Civil Misc. (Arbitration) Application No.70/07 M/s Chetak Travelling Agency v. Rajasthan State Mines & Minerals Ltd. & anr. 5 25.9.2006 wherein it has been stated that since the firm had filed the civil suit for similar purpose and the matter is sub-judice, therefore, no purpose would be served by appointing arbitrator by this application. The respondents submitted detail reply and placed on record copy of the judgment and decree dated 5.2.2005 passed in the Civil Original Suit No.102/2005 filed by the applicant by which the court of Civil Judge (Jr.Div.), Udaipur dismissed the suit of the applicant by deciding the issues against the applicant. One of the issues framed by the trial court was whether the non-applicant no.2 illegally terminated the contract in question and second issue was whether the plaintiff is entitled to run the buses under the contract. According to the learned counsel for the applicant, seeking injunction for running the buses under the contract was a subject different than the subject of claiming damages against the respondents on account of losses suffered by the applicant. It is submitted that none of the authority has ever decided about the validity and claim of the applicant for refund of the security deposit of Rs,6,00,000/- and about the due amount for months of April and May, 2005 amounting to Rs. 15,00,000/- and about the S.B.Civil Misc. (Arbitration) Application No.70/07 M/s Chetak Travelling Agency v. Rajasthan State Mines & Minerals Ltd. & anr. 6 amount due towards the extra work done by the applicant, cost of which is Rs.19,65,000/- and about the illegal deduction from the previous bills of the applicant-firm amounting to Rs.3,00,000/- as well as about the claim of loss suffered by the applicant amount to Rs,1,26,00,000/-. The learned counsel for the respondents vehemently submitted that when the issue has been decided once for all finally by the civil court, after the full trial of the suit and it has been held that the contract in question has not been terminated illegally by the respondents, then the applicant's prayer for adjudication of dispute by the arbitrator cannot be granted because of the reason that the finding given by the civil court between the parties is res judicate for all purposes and even the arbitrator cannot re-try the issue already decided. It is submitted that if the termination of the contract was lawful then there cannot arise any question of loss to the applicant-firm nor it can be argued that because of termination of contract, the applicant suffered loss and is entitled to recover the losses from the respondents. I considered the submissions of the learned counsel for the parties and perused the facts of the case. So far as the contract in S.B.Civil Misc. (Arbitration) Application No.70/07 M/s Chetak Travelling Agency v. Rajasthan State Mines & Minerals Ltd. & anr. 7 question is concerned, there is no dispute. Its termination before the period is also not in dispute. The civil court has dismissed the suit for injunction of the applicant wherein above referred issues were there but so far as claim of the applicant that yet the applicant is entitled to certain amounts which include the amount of security deposit and amount of extra work done by it and illegal deduction of the bills and loss of business are the issues which can well be determined by the arbitrator after taking into consideration that the issue which has been decided by the trial court in the suit filed by the applicant is binding and is res judicate on the question of termination of the contract. Even if the contract is terminated lawfully or the work comes to an end then also if any claim of the party to the contract remains due in other, he can certainly seek adjudication for that claim. The question whether in the facts and circumstances and in view of the decision given by the civil court, the security amount could have been forfeited and the applicant could have been denied the amounts claimed on various accounts referred above, alone can be decided by the arbitrator. Since there is arbitration agreement and dispute has been raised and the arbitrator has not been appointed by the respondents inspite of the notice by the applicant, therefore, the S.B.Civil Misc. (Arbitration) Application No.70/07 M/s Chetak Travelling Agency v. Rajasthan State Mines & Minerals Ltd. & anr. 8 dispute is referred to the arbitrator. Hon'ble Miss Justice Kanta Bhatnagar is appointed arbitrator to adjudicate the dispute. Looking to the fact that the applicant has already filed the suit and his suit has been dismissed by the trial court, therefore, it will be appropriate to direct the applicant to initially pay the fees of the arbitrator which is fixed Rs.50,000/- tentatively and the final fees may be determined by the arbitrator herself while deciding the arbitral proceedings and the arbitrator may also pass the order for sharing of the fees by the respondents if needed. The office expenses of Rs.15,000/- shall also be paid by the applicant. The application is allowed accordingly. A copy of this order be sent forthwith to the learned arbitrator. (PAKASH TATIA),J. mlt