SENBO ENGINEERING LIMITED Vs. STATE OF BIHAR

JUDGEMENT

(1.) M/s. Senbo Engineering Limited, the petitioner before this Court, had a claim that it demanded to be referred for arbitration as provided under the contract. The State Government, the other party disputing the petitioners claim, nominated an arbitrator. The petitioner felt that the appointment of the arbitrator was made in breach of the relevant provisions of the contract. It, therefore, moved the Chief Justice under Section 11 (6) of the Arbitration and Conciliation Act, 1996 making a request for appointment of an arbitrator on the plea that the nomination made by the State Government was nonest. The designated Judge took the view that since an arbitrator was already appointed, the petitioners request for appointment of arbitrator was not fit to be accepted. The application filed by the petitioner was, therefore, dismissed. But in view of certain observation made in the order passed by the designated Judge, the petitioner decided to appear before the person nominated by the State Government as arbitrator and raise the issue of maintainability of the proceedings before him (on the plea that his appointment was not in accordance with the provision of the contract). It appeared before the arbitrator only to find the doors closed; though keeping the proceedings alive in respect of the counter-claim of the State, the arbitrator had terminated it in regard to the petitioners claim under Section 25 (a) of the Act for its failure to file the statement of claim on the three dates fixed for the purpose. The petitioner then filed a petition before the arbitrator trying to make out sufficient cause for not submitting the statement of claim and praying that the arbitration proceedings in regard to its claim may not be deemed as terminated and that it may be allowed to raise the issue of maintainability of the proceedings before the arbitrator (on the ground that his nomination was not in accordance with the provisions of the Act) and further that in case the issue of maintainability was decided against it, to be given the opportunity to file its statement of claim and also to file its statement of defence in regard to the counter-claim of the other side. The arbitrator rejected the petitioners application primarily on the ground that the arbitral tribunal had no power to recall or review an earlier order passed under Section 25(a) of the act. Thus, finding the doors firmly closed and finding itself completely remediless, the petitioner has filed this writ petition challenging (1) the order, dated 30-12-2002 passed by Shri D. K. Srivastava, Chief Engineer-cum-Sole Arbitrator in arbitration proceedings for settlement of disputes arising out of Agreement No. 1-J/1997-98 by which he terminated the proceeding in respect of the claims of the petitioner under Section 25(a) of the act, and (2) the order, dated 30-6-2003 passed by the Sole Arbitrator in the same proceeding by which he rejected the petitioners application for restoration of the proceeding in regard to its claim primarily on the ground that the arbitral tribunal had no power to recall or review an earlier order passed under Section 25 (a) of the Act.

(2.) Mr. K. D. Chatterjee appearing on behalf of the petitioner submitted that the petitioners notion to challenge the maintainability or validity of the proceedings before the arbitral tribunal itself on the ground that appointment of the arbitrator was made in breach of the provision in the contract, was quite misconceived. He pointed out that under Section 12(3) of the Act the appointment of the arbitrator could only be challenged on grounds of his independence and impartiality or on the plea that he did not possess the qualifications agueed to by the parties. Any challenge to the arbian trators appointment on the ground that it was not made in accordance with the provision of the contract was foreign to Section 12 of the Act and, therefore, it could not be raised before the arbitral tribunal under Section 13 of the Act. Mr. Chatterjee further submitted that if the petitioner had wished to pursue his challenge to the appointment of Shri D. K. Shrivastava, Chief Engineer as the sole arbitrator, the only remedy available was to challenge the order passed by the designated Judge rejecting its request under Section 11(6) of the Act as also the order of the State Government appointing Shri D. K. Shrivastava as the sole arbitrator by filing a writ petition. Mr. Chatterjee, however, clarified that this issue was now only of academic interest. He stated that the petitioner was sufficiently harassed and it no longer wanted to question the appointment of Shri D. K. Shrivastava as the sole arbitrator. All that the petitioner now wanted was that it may be allowed to submit its statement of claim and its defence to the counter-claim of the State Government and that an arbitration be made over its claim, in accordance with law.

(3.) The facts and circumstances of the case and the submissions made by Mr. Chatterjee give rise to three questions for consideration by the Court :