UNION OF INDIA Vs. BEANT SINGH AND SONS

JUDGEMENT

(1.) This appeal is directed against the orders dated 20th April, 1996 and 30th July, 1996 passed by learned Additional District Judge, Srinagar in an arbitration petition under Section 20 of Arbitration Act, titled M/s. Beant Singh and Sons versus Union of India and others. Before enumerating the grounds for the appeal, I would like to adumbrate the facts from which the present appeal emanates.

(2.) Respondent, Beant Singh is an 'A' class M.E.S. contractor registered with the appellants and is the sole proprietor of business known as "Beant Singh and Sons". According to him, he tendered for and secured the lump sum contract No. CENK-14/78-79 for consruction of Admn storage and technical ACCN at Awantipora which was accepted by the appellants on 9th June, 1978. The amount involved in the contract was Rupees fifty six lakhs seventy one thousand and odd. The contract was stipulated to be completed within a period of two years, but, according to the respondent, due to non-availability of cement and iron etc., the contract could not be completed within the said period. The case of the respondent is that the execution of such contract was going on smoothly till November, 1980 when Lt. Col. B.S. Shrawat, CWE(P) 5240 C/O 56 APO took over the charge from Lt. Col. V. K. Jain. It is alleged that Lt. Col. B. S. Shrawat had personal animosity with the respondent and, to wreak vengeance, he created hurdles in the execution of the said contract on one pretext or the other. It is alleged that the said officer was already biased and prejudiced towards the respondent and he passed some adverse orders cancelling the contract, putting the respondent in the black list, ordering the respondent to pay huge amount as penalty etc. The respondent was obliged to file writ petition No. 544 of 1982 in this Court which was finally decided in favour of respondent vide judgment dated 12th December, 1987. In the said judgment, according to the respondent, reliefs granted to him by the Court were that the impugned order dated 11-10-1982 issued by the Chief Engineer, whereby an amount of Rs. 294280/- was ordered to be recovered from the respondent as cost of bags of cement was quashed;order of removal of respondent's name from the list of contractors dated 4-2-1983 for not producing valid income certificate was quashed. The Court also directed that the completion of the work through some other agency would not render the respondent liable to pay additional cost for the completion of the balance work. The writ Court further observed that the appellants would not be prevented to take appropriate action against those officers/officials who were responsible for creating conditions due to which the respondent was prevented from completing the work. Admittedly, in this judgment the Court has arrived at to the conclusion that the present appellants were prejudiced against the respondent and had bias. The orders passed against the respondent were mala fide because of personal animosity. This judgment, admittedly, was challenged by the present appellants in LPA but the said appeal was dismissed on 16th April, 1987 by the LPA Bench on the ground that the same was time barred. The appellants, thereafter, did not seek any further remedy to challenge the judgment passed by the Division Bench as a result whereof the judgment passed in writ petition No. 544/82 dated 12-12-1987 reached its finality. During the pendency of the said writ petition, it is stated that, the appellants appointed one Brig. Kasho Chandra, Chief Engineer, Jullunder Zone as the sole Arbitrator, for the parties had before acceptance of the tender agreed to abide by the arbitration clause contained in the contract as condition No. 70, in case any dispute regarding the work allotted to the respondent arose. The respondent felt aggrieved by the appointment of aforementioned Arbitrator and challenged the same before this Court in another writ petition No. 380/84 on the ground that this Court had already held in writ petition No. 544/82 that the present appellant was biased against the respondent and has passed some orders against the interests of the respondent with mala fides, so on these basis the appellant could not appoint an Arbitrator of his choice as envisaged in the contract because the appellants are prejudiced against him. This Court vide its order dated 13-6-1984 stayed the appointment of such arbitrator and subsequently such arbitrator expressed his intention to resign vide his letter dated 4-4-1987 and he, thereafter retired from service. Respondents also did not take any steps to nominate a fresh arbitrator. It is in this context the respondent filed an application under Section 20 of the Arbitration Act before this Court seeking the relief that the appellants be directed to file the agreement and secondly it was alleged that the nominated authority/arbitrator be superseded because, according to the respondent, due to the acts of omission and commission committed by the appellants and also due to abuse of executive powers, the bias and mala fides of the appellants stand proved vide judgment of this Court mentioned hereinabove, the nominated arbitrator be superseded and an impartial arbitrator be appointed to decide the disputes between the parties.

(3.) Objections were filed to this application by Mr. Anil Bhan, Sr. Standing Counsel for the Union of India on 15th July, 1993. He has denied the allegations put forth in the application by the respondent and has, inter alia, denied that the nominated arbitrator is biased. He has contended that damages enumerated by the respondent are fictitious and highly inflated and has refuted the contention of the respondent that the contract was cancelled in order to wreak vengeance on the respondent. He has further submitted that the conditions put in the contract do not stipulate any condition which provides for the appointment of an arbitrator by the Court. The arbitrator is required to be appointed in terms of the arbitration clause and the Court has no jurisdiction to thrust its own arbitrator because the power to appoint an arbitrator has been vested with the nominated agency i.e. the Engineer-in-Chief. According to the appellants, Court has no jurisdiction to appoint an arbitrator in supersession of the arbitration clause.