M/S Logos Construction Private Limited v. Union Of India

IN THE HIGH COURT AT CALCUTTA

[ CIRCUIT BENCH AT PORT BLAIR ] *** AP/14/2022 M/s Logos Construction Private Limited Vs.

Union of India Mr. Pijush Biswas ... for the petitioner [though virtual mode] Mr. V.D.Sivabalran ... for the respondent March 17, 2023 [SR] Item No.14 This is an application under section 11 of the Arbitration and Conciliation Act, 1996 for appointment of arbitrator.

There is an arbitration clause which is as follows: "(b) To execute all the works referred to in the said documents upon the terms and conditions contained or referred to therein and as detailed in the BOQ and to carry out such deviations as may be ordered vide condition 7 of IAFW-2249 upto maximum of (+)10% (Ten percent) and further agree to refer all disputes as required by condition 70 to sole Arbitration of serving officer having degree in Engineering or equivalent or having passed Final/Direct Final examination of Sub division -II of the Institution of Surveyors (India) recognized by the Government to be appointed by the Engineer-in-Chief, or in his absence the officer officiating as the Engineer-in-Chief, or the Director General of Works if specially delegated in writing by the Engineer-in-Chief, Army HQ, New Delhi whose decision shall be final, conclusive and binding."

The contention of the petitioner is that, despite the judgment delivered by the Supreme Court, referred in 2019 (SCC online) SC 1517, wherein the Supreme Court has clearly stated that the departmental head of one of the party cannot appoint an arbitrator as Supreme Court has given importance on the question of bias, the respondent has appointed one arbitrator in the dispute, after another arbitrator, who did not enter into reference.

There is a dispute as to the name, who has been appointed as an arbitrator. The petitioner submitted that one Jagdis Raj Garg, has been appointed as an arbitrator by the Director General of Works, Major General Ashok Kumar and the respondent has said that in this matter one Anil Kumar Agarwal has been appointed by the said Major General Ashok Kumar, Director General of Works. (I find here that said Ashok Kumar has done for the Engineering-in-Chief but the arbitration clause says that for doing any act like this, i.e. appointment of arbitrator, for the Engineering-in-Chief, there should be specific written delegation of power but the respondent has failed to show any such power of delegation for appointment of arbitrator by the Engineering-in-Chief to the Director General of Works).

In any event, whatever be the name of the Arbitrator, it has not been appointed following the Supreme Court's judgment, as has been indicated above.

The petitioner has submitted that the present arbitrator has already given notice to the petitioner that if they do not file their counter-statement, he will proceed ex parte as the statement of claim has already been filed before the said arbitrator.

I find after hearing the parties and after going through the arbitration clause that first the appointment has been made by the Director General of Works without any specific power of delegation.

Apart from this, the appointment has been made by one of the officers of the respondent, who is an outsider, which again not permitted under the clause because the person has to be a serving officer.

The person appointed, according to the respondent, who is an Additional Member (Retired) of Indian Railways. This is an another violation of the agreement. However, such appointment has been made in violation of the Supreme Court's pronouncement, as has been indicated above and, therefore, the appointment of the arbitrator by the said Director General of Works is wholly bad in the eye of law and is illegal and is set aside and quashed. Therefore, a new arbitrator is required to be appointed in this matter.

Here the respondents have submitted that if a new arbitrator is to be appointed, he must be an expert in engineering, which has been countered by the learned advocate of the petitioner that in several other similar arbitrations, learned advocates have been appointed and under section 26 of the Arbitration and Conciliation Act, such advocate can always take the assistance of the experts. Therefore, this Court finds that the situation has arisen, when this Court can appoint an arbitrator. Here I appoint Mr. Kishore Dutta, Former Advocate General of Calcutta High Court and a Senior Advocate as an arbitrator to adjudicate the dispute.

The learned arbitrator is requested to fix the remuneration in accordance with the IVth Schedule at the first sitting of the parties to be shared by the parties in equal shares.

Other costs, charges and expenses of the arbitrator shall also be equally shared by the parties.

Learned arbitrator is requested to complete the reference within a period of eighteen months from the date of filing of the statement of claim afresh by the claimant.

I am told that the respondent here has raised the claim and he shall be the claimant and the petitioner here shall be the respondent and he shall have naturally the right to file his counter-claim, if any.

It would be open to the learned arbitrator to conduct the proceedings physically or virtual or hybrid mode as may be convenient to the learned arbitrator and the parties and the place of arbitration will be decided by the arbitrator considering the convenience of the parties and of the arbitrator himself.

Accordingly, this arbitration petition, being AP/14/2022, is disposed of.

( Abhijit Gangopadhyay, J. )