STATE OF PUNJAB Vs. PARMAR CONSTRUCTION CO

JUDGEMENT

(1.) THIS order will dispose of three revision petitions 1200 of 1996, 4026 and 4556 of 1995 in which common questions of law and facts arise. Sincen the arguments were addressed in Civil Revision 1200 of 1996, the facts are being taken from this case.

(2.) M /s Parmar Construction Company (for short, the contractor) is engaged in the construction of works for various organisations and is registered as an 'a' class contractor. Work of construction of Sarsa Acquiduct of S. Y. L. Canal (Balance Work) was awarded to the contractor and an agreement dated 9. 12. 1988 executed between him and the State of Punjab. The terms and conditions governing the agreement in question were set out by the parties and it was, inter alia, agreed that the disputes and differences, if any, that may arise between them would be resolved through an Arbitrator to be appointed by the Chief Engineer of the State of Punjab. Clause 67 of the agreement is the Arbitration Clause and it provides that within 30 days of the receipt of notice from the contractor of his intention to refer the dispute to arbitration, the Chief Engineer shall send to the former a list of three in-service officers of Superintending Engineer or higher rank who were not connected with the S. Y. L. Project work. Within 15 days of the receipt of this list, the contractor was to select and communicate to the Chief Engineer the name of one officer from the list who was to be appointed as the sole arbitrator. It is not necessary to refer to the remaining paras of Clause 67 as we are not concerned with them in these cases. Disputes having arisen between the parties, Shri Sham Lal Garg, Superintending Engineer, Sirhind Canal Circle, Ludhiana was appointed the sole arbitrator in accordance with the procedure laid down in the arbitration clause. The said arbitrator fixed various dated of hearing and recorded evidence of the parties who produced some documents as well. While the arbitration proceedings were going on, the arbitrator was promoted as Chief Engineer. The concerned Chief Engineer then addressed a communication to the arbitrator pointing out that since he had been promoted as Chief Engineer he could not function as an arbitrator under the arbitration clause and he was advised not to proceed further with the arbitration proceedings. This communication to the arbitrator was wholly unwarranted as the arbitration clause did not disqualify the arbitrator from continuing with the arbitration proceedings on his promotion as Chief Engineer. However, the arbitrator accepted the advice of the Chief Engineer and stayed further proceedings in the cases. It was then that the contractor moved an application Under Sections 5, 11 and 12 of the Arbitration Act, 1940 (hereinafter called, the Act) for the removal of Shri Sham Lal Garg as the arbitrator on the ground that he had refused to proceed with the arbitration proceedings. This application was allowed and the authority of Shri Sham Lal Garg as arbitrator was revoked and in his place Shri S. S. Mongia, a retired Chief Engineer, resident of House No. 1203, Sector 43-B, Chandigarh was appointed as sole arbitrator for the adjudication of the matters in dispute between the parties. In the other two connected cases, the authority of the appointed arbitrator was revoked under similar circumstances and in one case Shri P. C. Sanghi, Chief Engineer (Retd.), resident of House No. 2145, Sector 21-C Chandigarh was appointed as an arbitrator whereas in the other case Sh. S. P. Goyal, Superintending Engineer, MES (Retd.), resident of House No. 14, Sector 8, Panchkula was appointed. It is against these orders of the trial court the present revision petitions have been filed by the State of Punjab.

(3.) HAVING heard counsel for the parties and after going through the orders passed by the trial court, I find no merit in the contentions of the learned State counsel. According to Section 12 (2) of the Act, when the authority of an arbitrator is revoked by leave of the court, the court may, on the application of any party, appoint a person to act as sole arbitrator in place of the person displaced. This is precisely what the trial court has done. At this stage, it would be relevant to reproduce the provisions of Sub-section (2) of Section 12 of the Act which read as under :