GRACE ENGINEERS Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS is a petition filed under section 11 of the Arbitration Act, 1940 for removal of the Arbitrators as also under section 12 of the Act for appointment of a Sole Arbitrator. The facts that are relevant and material for deciding the petition are that the petitioners entered into an agreement with respondent No. 1 for carrying out certain works. That contract was terminated in January, 1992. The petitioners, thereafter, submitted their bill for payment of the amounts. The petitioners also addressed a representation calling upon the respondents to decide their claim. But that was not done. Therefore, on 10th July 1992, the petitioners invoked the arbitration clause in the contract. However, the arbitrator was not appointed. Therefore, a petition under section 20 of the Act was filed before this Court and this Court by order dated 6th June 1996 issued a direction for appointment of arbitrators. Ultimately the General Manager, by communication dated 20th August 1996, appointed the arbitrators. Ms. Tanu Chandra was appointed as arbitrator by Railways whereas Mr. S. C. Gupta was appointed as nominee of the petitioners. Thereafter, the petitioners submitted their statement of claim before the arbitrators. The Railways submitted their written statement. The petitioners, thereafter, submitted their rejoinder on 23rd June 1997. Hearing of the case was fixed before the arbitrators on 5th August 1997, but the hearing could not take place because the nominee of the Railways namely Ms. Tanu Chandra was transferred. The Railways, therefore, on 26th August 1997 appointed Mr. P. S. Sharma as its arbitrator. It transpires that Mr. P. S. Sharma, who was appointed by Railways expressed his inability to act as a co-arbitrator and therefore, Mr. T. S. Varghese has been appointed in place of Mr. P. S. Sharma by Railways by letter dated 21st April 1999. The nominee of the petitioners continues to be Mr. S. C. Gupta. The present petition has been filed in 1998. However, there is no progress whatsoever in the arbitration proceedings. The petitioners have made a further grievance that as the number of the arbitrators is two, which is an even number, in terms of the provisions of Clause 2 of the First Schedule of the Act, the arbitrators were under a duty to appoint an umpire within one month of their appointments. However, despite several letters addressed by the petitioners, the arbitrators have not made the appointment of the umpire. The petitioners, in this circumstances, seek an order for removal of the arbitrators and appointment of a Sole arbitrator. The respondents have filed their affidavit in reply. In that affidavit, they have accepted that there is no progress made in the arbitration proceedings. According to them, as Mr. P. S. Sharma expressed his inability to continue as arbitrator, in his place, Mr. T. S. Varghese was appointed as an arbitrator on 21st April 1999. According to the affidavit filed by the respondents, however, the arbitration proceedings cannot be continued because the petitioners have not changed their nominee on the arbitrators panel namely Mr. S. C. Gupta. According to the averments in para 6 of the affidavit, the arbitration proceedings are to commence the moment the petitioners select one of the arbitrators as their nominee in place of Mr. S. C. Gupta. Respondent No. 1, however, has not explained as to how the petitioners can change their nominee when neither Mr. S. C. Gupta, who is the nominee of the petitioners has resigned as an arbitrator nor has he expressed his unwillingness to act as arbitrator. The position under the provisions of the Act is very clear that unless the arbitrator resigns or expresses his unwillingness, the petitioners would not be able to replace him. The respondents, in their affidavit, have not explained as to why the arbitrators failed to perform their statutory duty of nominating an umpire. When the hearing of the petition commenced, none was appearing for the respondents. However, when this judgment was being dictated, Ms. Bharucha appeared and submitted that she has been given to understand that she appears for the respondents. She further states that earlier Mr. J. P. Devdhar was appearing in this matter. She also states that she has no papers to go on with the matter. She also prays for adjournment of the matter. In my opinion, a request for adjournment could have been made before the argument commenced. In any case, in my opinion, in such situation, it will not be in the interest of justice to grant any adjournment in view of the fact that the respondents have filed their affidavit, which has been referred to in detail above.

(2.) AFTER having heard learned Counsel for the petitioners and after having gone through the petition and affidavit in reply, in my opinion, it is clear that the arbitrators have not only failed to perform their statutory duty of nominating an umpire, but they have also failed to use reasonable dispatch in going on with the arbitration proceedings and therefore the arbitrators have made themselves liable for their removal. Now as the arbitrators have to be removed, in my opinion, it would be in the interest of justice to appoint a retired Honble Judge of this Court as Sole arbitrator to decide the dispute between the parties. Honble Shri Justice S. C. Pratap (Retd.) is therefore, appointed as Sole arbitrator. Petition is disposed of accordingly. Order accordingly.