SURVI PROJECTS Vs. VEDA RESEARCH LAB PRIVATE LIMITED

JUDGEMENT

(1.) By this petition under Section 11(5) of the Arbitration and Conciliation Act, 1996 (for short "the Act"), petitioners have prayed for appointment of an independent Arbitrator to adjudicate disputes between the parties.

(2.) It is pleaded that applicant-M/s. Survi Projects entered into a contract with the respondent-M/s. Veda Research Lab Pvt. Ltd. on 31.1.1998 at Delhi for the construction of a factory building at Plot No.D-97-98,105-106,GreaterNoidaforthe respondent; the stipulated period for completion of the contract was seven months; however, due to various alleged breaches committed by the respondent in the contract, the work could not be completed with in the original stipulated time of completion of the contract. The respondent took possession of the building in October, 1999 and using the same since then. It is pleaded that even though the possession of the building was taken by the respondent as early on October, 1999, but the final payment as well as various other claims of the petitioner were not settled. By letter dated 26.4.2001, petitioner called upon the respondent to settle and pay various amounts due to the petitioner, and the respondent failed to pay the claims. Under Clause 37, it was agreed that all disputes arising out of the contract are to be settled by arbitration. In accordance with the arbitration agreement, the petitioner first referred the disputes to the architect for his decision with copy to the respondent. On these pleadings the petitioner has prayed for appointment of the Arbitrator. The respondent has filed the reply, opposing the application, inter alia pleading that the application for appointment of the Arbitrator is not maintainable inasmuch as the applicant has not followed the procedure prescribed under Clause 37 of the Agreement. In terms of Clause 37 of the agreement, in the event of respondent not agreeing or consenting in the appointment of the Arbitrator suggested by the applicant, a panel of three Arbitrators is required to be appointed to adjudicate upon the disputes between the parties to the agreement. The applicant ought to have taken recourse to the said procedure. The application as such is liable to be dismissed.

(3.) Law with regard to appointment of the Arbitrator under Section 11 of the Act by the Chief Justice or his designate is well settled. Section does not contemplate a decision by the Chief Justice or his designate, on any controversy between the parties. The decision to nominate is not adjudicatory but is administrative. This section does not contemplate even a response from other party. The only function of the Chief Justice or his designate under Section 11 (6) is to fill the gap left by a party to the arbitration agreement. This is to enable the Arbitral Tribunal to be expeditiously constituted and the arbitration proceedings to commence. Reference in this regard may be made to the Apex Court's in Konkan Railways Corporation Ltd. v. Rani Construction Pvt. Ltd., I (2002) SLT 533=I (2002) CLT177 (SC)=2002 (1) Scale465 and Konkan Railway Construction Corporation Ltd. v. M/s. Mehul Construction Co., VI (2000) SLT 321=IV (2000) CLT 45 (SC)=JT 2000 (9) SC 362.