SAI ENGINEERING CONTRACTORS Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS application by M/s. Sai Engineering contractors - a firm represented by its managing Director under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (Arbitration Act, for brevity) seeks appointment of sole arbitrator to resolve dispute in relation to and arising out of the agreement, dated 23. 01. 2006 between applicant and respondents.

(2.) THE applicant is a contractor inter alia undertaking various works with Railways. Construction of Steel Structural Foot Over bridge (FOB) on the northern side connecting ttd choultry and reservation complex at tirupathi was entrusted to applicant under an agreement, dated 23. 01. 2006. The same is governed by terms and conditions of tender notification, contract entered into between the parties, and General Conditions of Contract (GCC) as well as Special conditions of Contract (SCC ). Clauses 63 and 64 of GCC provide for arbitration in the event of disputes between parties. Be that as it is, the work entrusted to applicant is required to be completed on or before 25. 11. 2005 and to be maintained for a period of six months from the certified date of completion. The applicant procured steel from reputed manufacturer, got it approved by Engineer-in-Chief and utilised the same. However, the firm was asked to remove fob and execute additional works which allegedly had no bearing with the work entrusted. This, according to applicant, was due to change in the thinking wherein it was decided to have the existing road extended at the site where structures were raised. Therefore, applicant refused to do so and thereafter respondents got the structure removed and measured quantity of steel. In spite of repeated requests, bills were not paid and therefore, applicant demanded payment for the work done. Respondents refused. Applicant raised dispute and finally on 14. 09. 2007, applicant requested respondents to refer the matter to arbitration. As there was no response, applicant approached the Chief Justice/his Designate of this Court.

(3.) INITIALLY counter affidavit has been filed on behalf of respondents 1 and 2 on 19. 12. 2008. Subsequently, when applicant filed additional affidavit on 19,03. 2009 denying execution of that part of contract containing clause 21 of SCC, respondents 1 and 2 filed additional counter thereto. Application is opposed on three grounds. As per clause 2% of SCC, application is not maintainable as claims/disputes raised by applicant for adjudication through arbitration exceeding the value of more than 20% of contract value. Secondly, applicant has signed main agreement and even if there is no signature on relevant page containing clause 21 of SCC, it is bound by the agreement and lastly, even if an arbitrator is appointed, the Chief Justice/his Designate has to direct parties to appoint arbitrators as per the agreement conditions and an outsider cannot be appointed as sole arbitrator. In this connection, they point out that as per procedure contemplated a panel of arbitrators would be communicated to contractor out of which he has to choose one and the General Manager of the railways would appoint another contractor out of panel communicated and also nominate the Chairman of the Tribunal. Respondents also contend that clauses 63 and 64 have no application in view of the clause 21 of SCC.