Arbitration Case No. 120 of 2007 [1] IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH Arbitration Case No. 120 of 2007 Date of decision: February 20 , 2009 Radical Builders (India) Pvt. Ltd. …Petitioner Versus District Bar Association, Patiala and another …Respndents CORAM: HON’BLE MR. JUSTICE T.S.THAKUR, CHIEF JUSTICE Present: Mr. Sharan Sethi, Advocate for the petitioner Mr.H.S.Sidhu, Additiional Advocate General, Punjab for respondent No.2. T.S.THAKUR, CHIEF JUSTICE In this petition filed under Section 11 of the Arbitration and Conciliation Act, 1996, the petitioner company seeks a declaration to the effect that the mandate of named Arbitrator stands terminated and prays for the appointment of a substitute Arbitrator for the adjudication of the disputes that have arisen between the parties. The controversy arises in the following circumstances: The petitioner appears to have entered into a contract with Arbitration Case No. 120 of 2007 [2] respondent No.1 District Bar Association Patiala in connection with the construction of Lawyers Chambers in District Court Complex at Patiala. Clause 25 of the said contract, a copy whereof has been annexed with the petition, envisaged adjudication of the disputes or differences between the parties by way of Arbitration. The Superintending Engineer, Circle No.1, PWD (B&R) Branch, Patiala was nominated by designation as the Arbitrator in the said Clause. The petitioner’s case is that sometime during the month of February/March, 2005, disputes and differences arose between the parties with regard to the agreement, pursuant whereto the petitioner demanded payment of his dues invoked the Arbitration Clause and requested respondent No.1 to refer the matter for settlement to the Building Committee as per the agreed procedure. In reply to the said letter, respondent No.1-District Bar Association, Patiala informed the petitioner that it was not willing to make the payment demanded by the petitioner as the same was not admissible to him. The Association however had no objection to the matter being referred to the Arbitrator for adjudication. The petitioner then addressed a letter dated 10.4.2005 to respondent No.2, the named Arbitrator, to enter upon the reference and adjudicate the matters in dispute. This was followed by another letter dated 24.6.2006 addressed to the named Arbitrator with the same request. The petitioner’s case is that despite receipt of the said request and a reminder dated 6.1.2006, a copy whereof has also been enclosed with the petition as Annexure P-6, the named Arbitrator has not entered upon the reference nor taken any action to determine the matters in dispute. In the meantime, the petitioner Arbitration Case No. 120 of 2007 [3] claims to have continued the work and successfully completed and handed over the building to respondent No.1 on 15.12.2005. The final bill dated 18.3.2006 for the amount payable to the petitioner consisted of the lump sum amount settled in the agreement and the cost of extra work, allegedly executed on the instructions given by respondent No.1. The petitioner’s case is that respondent No.1 is in possession of the building and was using the same but had not paid the final bill or the cost of additional items. The respondent- Association is also alleged to have denied the payment of service tax of Rs.1,38,100/- deposited by the petitioner and release of the balance security amount of Rs.3,40557/- deducted from the petitioner’s bill. On the contrary, the petitioner appears to have been accused of not completing the work, which left the petitioner with no option but to serve a notice dated 9.8.2006 upon the association claiming the amounts payable to him on different counts including final bill, service tax, balance security amount, interest on delay in final bill etc. amounting to Rs.25,64,381/- with interest. The request made to the Building Committee also having failed to resolve the stalemate, the petitioner claims to have approached the nominated Arbitrator for adjudication of the disputes. The petitioner’s case is that vide letter dated 8.11.2006, respondent No.2 has finally informed the petitioner that he was unable to enter upon the reference unless the Government issued an order permitting him to do so. The letter received from the nominated Arbitrator reads as under:- Vide above noted application, you have made a request to this office that arbitration proceedings in the above noted case be started and date of hearing may be fixed. Arbitration Case No. 120 of 2007 [4] In this connection, it is pointed out that this work has not been done on behalf of Punjab Govt. and work has been executed by you on behalf of District Bar Association. You have not attached the Govt. orders with your application vide witch the Govt. has appointed me as Arbitrator in the above noted case. Without the Govt. orders, I am not in the position to start the proceedings and fixed the date of hearing in this case. So no action will be taken on your above noted case by this Office which please note, till Govt. orders in this case are arranged by you or by Distt Bar Association. Sd/- Superintending Engineer, Patiala Circle No. 1, PWD, B&R, Br. Patiala. The present petition has, in the above background, been filed seeking termination of mandate of the nominated Arbitrator and the appointment of a substitute Arbitrator in his place. In response to the notice issued by this Court, Mr.Rahul Sharma, Advocate, appeared on behalf of respondent No.1 on 19.2.2008 while Mr.Amol Rattan Singh, Additional Advocate General, Punjab entered appearance on behalf of respondent No.2. Respondent No.1-Association did not, however, file any objections to the application. The objections filed by respondent No.2 inter alia point out that since the State was nor a party to the agreement executed between the petitioner and respondent No.1, the Arbitration Arbitration Case No. 120 of 2007 [5] proceedings could not be initiated by the nominated Arbitrator. It is further stated that even the consent of the Superintending Engineer had not been obtained before nominating him as an Arbitrator which meant that he could decline to act as such. I have heard the learned counsel for the petitioner at some length. No one has appeared on behalf of respondent No.1- Association. Mr.Rameshwar Malik, learned counsel appearing for respondent No.2, however, submitted that execution of the contract and existence of an Arbitration Clause in the same providing for adjudication of the disputes by the nominated Arbitrator is not denied. He fairly conceded that neither under the Arbitration and Conciliation Act, 1996 nor under any other statute, was there a bar to the Superintending Engineer acting as an Arbitrator in a matter in which the State was not a party. He urged that there was no need for the Superintending Engineer to seek the permission of the Government before entering upon the reference, if the Court otherwise felt that a reference could be made and the Arbitrator called upon to make an award in accordance with law. In the circumstances and keeping in view the fact that the material averments made in the Arbitration Petition have not been denied by respondent No.1, I see no reason why the nominated Arbitrator should not be directed to enter upon the reference and adjudicate upon the disputes between the petitioner and respondent No.1 in accordance with law. It is true that the nominated Arbitrator had at one stage declined to act in the matter unless the Government permitted him to do so, yet the statement made by Mr.Malik on behalf of the State obviates the need for any such permission or Arbitration Case No. 120 of 2007 [6] sanction from the Government. The nominated Arbitrator cannot, in the circumstances, be said to have lost the mandate to adjudicate upon the matters in dispute so as to call for a substitute appointment. In the result, I allow this petition and refer the disputes between the petitioner and respondent No.1 to respondent No.2, the nominated Arbitrator, with a direction that the said Arbitrator shall enter upon the reference and adjudicate upon the matters in disputes in accordance with law after notice to respondent No.1. There shall, however, be no order as to costs. February 20 , 2009 ( T.S.THAKUR ) `Kalra CHIEF JUSTICE